| Summary of Significant Accounting Policies | Note
1. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited interim consolidated
financial statements of Brenham Oil & Gas Corp. (Brenham) have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in
conjunction with the audited consolidated financial statements and notes thereto contained in Brenham's Annual Report on Form 10-K
filed with the SEC for the year ended December 31, 2014. In the opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented
have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected
for the full year. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures
contained in the audited financial statements for the most recent fiscal year as reported in the Form 10-K have been omitted. Organization, Ownership and Business Brenham Oil & Gas, Inc. was incorporated
under the laws of the State of Texas in November 1997 and became a wholly-owned subsidiary of American International Industries,
Inc. ("American") in November 1997. On April 21, 2010, the Company was re-domiciled in Nevada as Brenham Oil & Gas
Corp. (Brenham) and Brenham Oil & Gas, Inc. became a wholly-owned subsidiary of Brenham. American was issued
64,977,093 shares of common stock of Brenham in connection with the reorganization in exchange for all shares outstanding of Brenham
Oil & Gas, Inc. The reorganization has been retroactively applied to the consolidated financial statements for all periods
presented. Use of Estimates In preparing financial statements in conformity
with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Going Concern The consolidated financial statements have
been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities
in the normal course of business for the foreseeable future. The Company incurred a loss from operations during the six months
ended June 30, 2015 and 2014, has financial commitments in excess of current capital resources, and expects to incur further losses
in the future, thus raising substantial doubt about the Companys ability to continue as a going concern. The ability
to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the
necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management
plans to obtain the necessary financing to meet its obligations during 2015. These financials do not include any adjustments
relating to the recoverability and reclassification of recorded asset amounts, or amounts and classifications of liabilities that
might result from this uncertainty. Cash and Cash Equivalents Brenham considers all short-term securities
purchased with a maturity of three months or less to be cash equivalents. Accounts Receivable Accounts receivable consist primarily of receivables
from oil and gas revenue, and are carried at the expected net realizable value. Oil & Gas Properties The Company follows the full cost method of accounting for its investments in oil and gas properties, whereby
all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves,
including unproductive wells, are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals
on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable
to those activities, and asset retirement costs. General and administrative costs related to production and general overhead are
expensed as incurred. Disposition of oil properties are accounted
for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship
between capital costs and proved reserves of oil, in which case the gain or loss is recognized in the statement of operations. Future development, site restoration, dismantlement
and abandonment costs, are estimated property by property, based upon current economic conditions and regulatory requirements,
and are included in amortization of our oil and natural gas property costs. Depletion of capitalized oil properties and
estimated future development costs, excluding unproved properties, are based on the unit-of-production method based on proved reserves. At the end of each quarter, the unamortized
cost of oil and natural gas properties, net of related deferred income taxes, is limited to the sum of the estimated future after-tax
net revenues from proved properties, after giving effect to cash flow hedge positions, discounted at 10%, and the lower of cost
or fair value of unproved properties, adjusted for related income tax effects. This limitation is known as the ceiling test,
and is based on SEC rules for the full cost oil and gas accounting method. There was no ceiling test write-down recorded during
the six months ended June 30, 2015 and 2014. The Company assesses the carrying value of
its unproved properties for impairment periodically. If the results of an assessment indicate that an unproved property is
impaired (which was assessed in connection with the Companys evaluation of goodwill impairment), then the carrying value
of the unproved properties is added to the proved oil property costs to be amortized and subject to the ceiling test. The Company
recorded an oil and gas impairment of $20,000 during the six months ended June 30, 2015. As of June 30, 2015 and December 31, 2014,
the Company has properties in the amount of $91,900 and $341,900, respectively, which are being excluded from amortization because
they have not been evaluated to determine whether proved reserves are associated with those properties. Costs in excess of the
present value of estimated future net revenues as discussed above are charged to impairment expense. Income Taxes Brenham is a taxable entity and recognizes
deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured
using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets
and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change.
A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. Interest
and penalties associated with income taxes are included in selling, general and administrative expense. Brenham has adopted ASC 740-10 Accounting
for Uncertainty in Income Taxes, which prescribes a comprehensive model of how a company should recognize, measure, present,
and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return.
ASC 740-10 states that a tax benefit from an uncertain position may be recognized if it is "more likely than not" that
the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of
tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full
knowledge of all relevant information. As of June 30, 2015, Brenham had not recorded any tax benefits from uncertain tax positions. Net Loss Per Common Share Net loss per common share is computed by dividing
the net loss by the weighted average number of shares outstanding during a period. The weighted average number of shares was calculated
by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Basic and
diluted net losses per share were the same, as there were no common stock equivalents outstanding. For the six months ended June 30, 2015 and
2014, 3,000,000 stock options were excluded from the computation of diluted net loss per share, as the inclusion of such stock
options would be anti-dilutive. Recent Accounting Pronouncements There were various accounting standards and
interpretations issued recently, none of which are expected to have a material impact on the Companys financial position,
operations, or cash flows. Subsequent Events The Company has evaluated all transactions through the date the
consolidated financial statements were issued for subsequent event disclosure consideration. |
