Green Petroleum, a successful efforts company, began operations in 2018 with the acquisition of one field. Green proved the field during 2018. At the end of 2018, prices were high and costs low. During 2019, Green continued exploration and development activities in the field, but towards the end of 2019, the government began discussing a significant increase in the tax rates. During 2020, the tax hike was approved and enacted. Data for Green’s one field are as follows:

REQUIRED: Make any necessary journal entries for the above years relating to impairment.

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Capitalized costs before any write-downs Accumulated DD&A Expected undiscounted future net cash flows Fair value (discounted future net cash flows) 2018 $400,000 20,000 390,000 300,000 2019 2020 $900,000 $900,000 100,000 180,000 880,000 600,000 580,000 520,000