Question

What is an accounting problem associated with natural resources?

A. What pattern of consumption should the company employ?
B. How should the cost basis for write-off be established?
C. How should the renewal of the asset be accomplished?
D. What percentage of income should be assigned to development?

Answer 1

An accounting problem associated with natural resources is how to establish the cost basis for write-off.

Step-by-step explanation:

An accounting problem associated with natural resources is how should the cost basis for write-off be established. When a natural resource is extracted or depleted, the company needs to determine how much of the cost should be allocated to that specific extraction or depletion. For example, if a company owns a forest and cuts down trees for timber, they would need to decide how much of the costs associated with owning and maintaining the forest should be attributed to each tree that is cut down.