Question

Pharoah Oil Company acquired property rights to search for natural resources on land that it is convinced has oil reserves, for \$15,412,600. The contract requires that Pharoah restore the property to a status usable for a park after drilling and extraction are complete. The estimated cost of this restoration is \$2,348,000. Pharoah incurs exploration costs of \$1,329,000 and intangible development costs of \$1,552,000. Geological surveys suggest that approximately 1,120,000 barrels of oil can be extracted from the site. In 2025, Pharoah extracts 248,000 barrels of oil. (a) What is the depletion base for this location for Pharoah Oil? \$

          Pharoah Oil Company acquired property rights to search for natural resources on land that it is convinced has oil reserves, for \$15,412,600. The contract requires that Pharoah restore the property to a status usable for a park after drilling and extraction are complete. The estimated cost of this restoration is \$2,348,000. Pharoah incurs exploration costs of \$1,329,000 and intangible development costs of \$1,552,000. Geological surveys suggest that approximately 1,120,000 barrels of oil can be extracted from the site. In 2025, Pharoah extracts 248,000 barrels of oil.
(a)
What is the depletion base for this location for Pharoah Oil?
\$

Pharoah Oil Company acquired property rights to search for natural resources on land that it is convinced has oil reserves, for $15,412,600. The contract requires that Pharoah restore the property to a status usable for a park after drilling and extraction are complete. The estimated cost of this restoration is $2,348,000. Pharoah incurs exploration costs of $1,329,000 and intangible development costs of $1,552,000. Geological surveys suggest that approximately 1,120,000 barrels of oil can be extracted from the site. In 2025, Pharoah extracts 248,000 barrels of oil.
(a)
What is the depletion base for this location for Pharoah Oil?
$

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