In 2010, Hart Co.invested $4, 000, 000 in oil well exploration activities.Seventy percent of the drilling was successful and resulted in commercial quantities of oil being found.
Required:
a. Inchcate the amount of driling expense Hart Co. would recognize in 2010 if the fill-cost method is in use.
b. Indicate the cost that would be reponted on the balance sheet as oil and gas properties if the successful-efforts method is in use.

Successful-efforts Method

An accounting method used in the oil and gas industry focusing on capitalizing the cost of successful projects and expensing those of unsuccessful ones.

Full-cost Method

An accounting method where all direct and indirect costs of producing an asset are capitalized or included in its cost base.

Drilling Expense

Costs associated with the process of drilling, such as those incurred in the exploration and production of oil and gas resources.