Concerning current accounting for oil and gas properties, which statement is true?

A) The successful-efforts method must be used.
B) The reserve-recognition method must be used.
C) Either the successful-efforts method or the full-cost method may be used.
D) The full-cost method must be used.

Successful-efforts Method

An accounting method used in the energy industry for recognizing and capitalizing only those expenses associated with successfully locating new oil or natural gas reserves.

Full-cost Method

A method of accounting for all expenditures associated with the exploration and development of oil and gas reserves as capitalized costs, which are then amortized over the total volume of proven resources.