Question

If a company obtained new information concerning the recoverable reserves available for a current project, then the company would revise the depletion rate

A. on a retroactive basis.
B. on a prospective basis.
C. for past financial statements.
D. for future projects.

Answer 1

If a company obtained new information concerning the recoverable reserves available for a current project, the company would revise the depletion rate on a prospective basis for future projects.

Step-by-step explanation:

If a company obtained new information concerning the recoverable reserves available for a current project, the company would revise the depletion rate on a prospective basis. This means that the company would update the depletion rate for future projects.

The depletion rate is used to estimate the timescale for resource availability. It is calculated by dividing the remaining resource in the ground by the current rate of use. If the company obtains new information about the recoverable reserves, it would update this calculation to make more accurate predictions for future projects.