Garza Company purchased three leases as follows:

All the leases are classified as significant.

a. On December 31, 2004, Lease A is determined to be 25% impaired. Leases B and C are not impaired.

b. On December 31, 2005, Lease A is determined to be impaired a total of 75% and Lease C 60%. Lease B is not impaired.

c. On December 31, 2006, 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. Prepare journal entries for all the above transactions except the initial purchase.

Transcribed Image Text:

July 1, 2004 August 15, 2004 Lease A $100,000 Lease B 200,000 October 10, 2004 Lease C 300,000