Ceiling test limitation is of greater concern for companies

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Reference no: EM131455879

The ceiling test is required by the SEC for the cost of oil and gas properties on the balance sheet. The recorded capitalized costs for producing oil and gas properties are limited to the net present value of the reserves discounted at 10%. This is the SEC value of reserves or standard measure. If the SEC value of reserves falls below the capitalized costs on the balance sheet, a ceiling write-down occurs.

This ceiling test limitation is of greater concern for companies using which of the accounting methods?

A) Successful efforts

B) Full cost

C) Former cost

D) Concept cost

Reference no: EM131455879

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