Question

alberta petroleum holds huge reserves of oil assets. assume that at the end of 2025, alberta petroleums cost of oil reserves totaled $72,000,000,000, representing 9,000,000,000 barrels of oil
requirements

1. which method does alberta petroleum use to compute depletion?
2. suppose alberta petroleum removed and sold 500,000,000 barrels of oil during 2026. journalize depletion expense for 2026

requirement 1. which method does alberta petroleum use to compute depletion?
units of production is the method used to compute depletion
requirement 2. suppose alberta petroleum removed and sold 500,000,000 barrels of oil during 2026. journalize depletion expense for 2026. (assume no residual value. record debits first
than credits. select the explanation on the last line of the journal entry table.)

Explanation:

Step1: Calculate depletion per barrel

Depletion per barrel = $\frac{\text{Cost of oil reserves}}{\text{Total barrels of oil reserves}}$
Given cost of oil reserves = $72,000,000,000$ and total barrels of oil reserves = $9,000,000,000$
Depletion per barrel = $\frac{72000000000}{9000000000}=8$

Step2: Calculate depletion expense for 2026

Depletion expense = Depletion per barrel × Barrels removed and sold
Barrels removed and sold = $500,000,000$
Depletion expense = $8\times500000000 = 4,000,000,000$

Step3: Journalize the depletion expense

Date	Accounts and Explanation	Debit	Credit
	Accumulated Depletion - Oil Reserves		$4,000,000,000$
	(To record depletion expense for 2026)

Answer:

The journal entry for depletion expense in 2026 is as shown above.