Baseline Petroleum, a successful efforts company, entered the oil and gas business in 2014 with the acquisition of one field. Baseline proved the field during 2014. At the end of 2014, prices were high and costs low. During 2015, Baseline continued exploration and development activities in the field, but towards the end of 2015, oil and gas prices plummeted. During 2016, due to continued low prices, Baseline suspended all exploration and development activities. Prices at the end of 2016 declined significantly once again. Data for Baseline’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) 2016 2014 2015 $300,000 $900,000 $900,000 20,000 100,000 180,000 290,000 820,000 700,000 200,000 580,000 520,000