Driller Inc

Multiple Choice

Driller Inc. has $498,200 of unrecovered capitalized costs in Well #83. This year, cost depletion on the well is $356,000. Which of the following statements is true?

A) If Driller's allowable percentage depletion is $313,000, Driller will deduct cost depletion.
B) If Driller's allowable percentage depletion is $515,000, Driller will deduct percentage depletion.
C) If Driller's allowable percentage depletion is $515,000, Driller's depletion deduction is limited to $498,200.
D) Statements a. and b. are true.