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Accumulated Depletion

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Accumulated Depletion
A total reduction to the value of an asset over time. Accumulated depletion comes about as a result of the physical reduction of the asset's features. For example, there is a limited amount of oil in an oil field. Accumulated depletion is the total reduction to the value of the oil field as the oil is drilled up over time. Accumulated depletion is recorded on a balance sheet most often in connection with natural resources. See also: Contra-Asset, Depreciation, Amortization.


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This accounting method further requires that capitalized oil and gas property costs less accumulated depletion and net of deferred income taxes may not exceed an amount equal to the present value, discounted at 10%, of estimated future net revenues from proved oil and gas reserves plus the cost, or estimated fair value, if lower, of unproved properties.
143, "Accounting for Asset Retirement Obligations" effective January 1, 2003 and recognized a charge representing the cumulative effect of the transition to accounting for asset retirement obligations, asset retirement costs and accumulated depletion and accretion in accordance with the new standard.
The ceiling test is a cost recovery test whereby the capitalized costs less accumulated depletion and depreciation, future site restoration and abandonment and future income tax liabilities are limited to an amount equal to the estimated undiscounted future net revenues from proved reserves less estimated recurring general and administrative expenses, future site reclamation and abandonment costs, future financing costs and income taxes.
 
 
 
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