Frank Oil Company acquired the following three unexplored leases: All the leases are classified as individually significant.
Question:
Frank Oil Company acquired the following three unexplored leases:
All the leases are classified as individually significant.
a. On December 31, 2018, Lease A is determined to be 40% impaired. Lease B and Lease C are not impaired.
b. On December 31, 2019, Lease A is determined to be impaired a total of 70%, and Lease C, 60%. Lease B is not impaired.
c. On December 31, 2020, Lease A is considered to be 100% impaired and is abandoned. Lease B is 30% impaired, and a well on Lease C found proved reserves.
REQUIRED: Prepare journal entries for all of the above transactions except the initial purchase.
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Step by Step Answer:
To prepare the journal entries for the impairment and abandonment of leases we need to consider the ...View the full answer
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