Question Details

The purpose of accruing future removal and site restoration costs 



1.	Natural resource amortization is
		a.	a decrease in market value of natural resources.
		b.	the amount of spoilage that occurs when natural resources are extracted.
		c.	the process of allocating the cost of natural resources to expense.
		d.	the method used to record unsuccessful oil well explorations.

	2.	To qualify as natural resources in the accounting sense, assets must be
		a.	underground.
		b.	replaceable.
		c.	of a mineral nature.
		d.	physically extracted in operations.

	3.	All of the following are examples of wasting assets except a
		a.	coal mine.
		b.	timber stand.
		c.	logging truck.
		d.	gold mine.

	4.	The purpose of accruing future removal and site restoration costs is to
		a.	reduce the company- taxable income and required tax payments.
		b.	provide cash to return the resource to its original state at the end of the project- life.
		c.	comply with the revenue recognition principle.
		d.	match the costs associated with the natural resources to the revenue generated by the asset.

	5.	The method most commonly used to calculate resource amortization is the
		a.	straight-line method.
		b.	declining-balance method.
		c.	units-of-activity method.
		d.	some other method.



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