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cost depletion

  • ImageDirect | About Us

    At ImageDirect, we are much more than just paper and pens! We pride ourselves on offering our customers complete supply solutions, whether it’s supplying your daily stationery requirements or helping you to plan a complete office refurbishment.

    You may appreciate the range and value of our portfolio or, the value for money and cost savings you achieve.  Maybe it’s the manner in which we manage our impact on the environment through the business practices we employ and the products we offer.  Whether it’s these attributes of our business, or the personal service we provide to yours, we are focused on performing for your business!

    At ImageDirect, we have a catalogue and support teams for everything your office needs!  From office and facilities supplies to furniture and interiors, print management services to IT equipment, consumables and corporate promotional products, even those awkward ad hoc items you have on occasion, we’ll go that extra mile to source and service whatever is needed.

    We pride ourselves on our pro-active account management, working with you to a structured Account Plan to ensure initial savings and recommendations are not only delivered and maintained, but improved upon over time.

    At ImageDirect, we’re focused on performing for your business. So, what does that really mean?

    Performing means having a complete supply solution with specialist support across seven product areas. Everything from a paper clip to a complete office refurbishment or corporate rebrand, it makes life easier and so much more efficient, knowing you can get everything from just one source.

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    At ImageDirect, performing for your business means consistently delivering a personal and flexible service with ongoing value and cost saving solutions.

    ImageDirect. Performing for your business, delivering everything your office needs.

  • Oil and Gas - Property Accounting Types

    I am Jon Gwynn. I am David Hill, Tax Manager.

    Today we're going to talk a little bit about oil and gas depletion both from a U.S. GAAP perspective as well as a tax perspective. I am the audit director for the firm, so I'll talk a little bit about the two U.S. GAAP methods that are accepted. They are called successful efforts and full cost and David will talk a little about the tax methods.

    Right. Now for the tax methods there are two types, there is percentage depletion and there is cost depletion.

    Under U.S. GAAP there are two generally accepted methods to account for oil and gas properties, successful efforts and full cost. So, as a small business if you are just starting to decide on which method to use, there are a bunch of different ideas that go into choosing the method.

    Full cost is probably the easiest to account for, it doesn't take a lot of time, it groups all of your properties together by continent or a region. Successful efforts you have to go to a lower level of accounting forward by well, property, fields.

    So if you have the resources to do the accounting forward I would recommend successful efforts. One of the main reasons for that is if we ever do adopt IFRS successful efforts right now is the most closely aligned with companies that are doing IFRS accounting.

    A couple of other considerations to look into. Full cost method, if you sell properties or if you drill a dry hole then you don't get necessarily a benefit out of it on your income statement, it all just remains within that property group. So there is no real P&L impact to it.

    Okay, I am going to talk about the tax methods for deducting depletion. Jon covered earlier the cost method, and that is also allowed for tax, but we use a little bit different base versus the same formula. That's allowable method, and there is also another one percentage depletion. This is allowed by Congress and this is available for people who own property in the U.S. in your own economic interest. It's not available if you own a refinery or you are a retailer.

    Now what this is, is it's deduction is a 15% of your gross proceeds. And what this does is it gives you that deduction in tax return, which helps minimize your tax liability. It is subject to limits though, one is it's done on a property by property basis and you can't create a loss with depletion, so is that 100% of all your taxable income.

    Now the other one is the 65% and this is for everything you do not just oil and gas. In this scenario you can't take it below that level and that's the only two limitations for percentage depletion on your tax return.

    So these are some of the ideas we want to give you on how to account for your oil and gas properties and the way to do depletion.

    If you have any questions or need us to help you out in any way please give us a call, we're at PriceKubecka.

    For almost two decades, the PriceKubecka Dallas CPA firm has been providing professional tax, audit, and accounting solutions, strategies and assistance for businesses in the Dallas Fort Worth Metroplex and other regional cities. Our team includes seasoned professionals that bring experience from both the private sector and larger, national CPA firms. This synergy of experience enables us to provide unparalleled expertise and specialization to large firms and small businesses alike — all with the personalized attention and responsiveness you deserve.

    PriceKubecka is a professional, strategy-driven CPA accounting firm with the know-how to improve profitability and take the anxiety out of tax, audit and accounting issues. We focus on meeting the accounting, tax and auditing needs of companies on the move — like yours — ensuring your financial situation is in line with your overall business strategy. Let us provide your business the peace of mind it needs to flourish.

    PriceKubecka, PLLC
    16775 Addison Rd
    Suite 500
    Addison, TX 75001