Natural Resources

Long-term assets purchased for the economic value that can be taken from the land and used up rather than for the value associated with the land’s location.

Natural resources are wasting assets that are converted to inventory by cutting, pumping, mining, or other forms of extraction. Natural resources are recorded at cost as long-term assets. They are allocated as expenses through depletion charges as the resources are sold. The depletion charge is based on the ratio of the resource extracted to the total estimated resource. A major issue related to this subject is accounting for oil and gas reserves.

• Full-costing
• Successful Efforts Accounting