Question

With regards to the accounting for the extractive industries, which of the following methods of accounting...

With regards to the accounting for the extractive industries, which of the following methods of accounting for exploration and extraction costs is inconsistent with the conceptual framework?

Area of Interest Method

Full Cost Method

Successful Efforts Method

All of the above are consistent with the conceptual framework
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Answer #1

The Answer is Full Cost Method.

Full Cost Method Definition

The full-cost method is an accounting system used by companies that incur exploration costs for oil and natural gas that does not differentiate between operating expenses associated with successful and unsuccessful exploration projects. So with regards to the accounting for the extractive industries, Full Cost Methods of accounting for exploration and extraction costs is inconsistent with the conceptual framework.

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