Hard Luck Oil Company owned the following unproved property as of the end of 2005.

Although no activity took place on Lease A during the year, Hard Luck decided that Lease A was not impaired because there were still three years left in that lease’s primary term. Two dry holes were drilled on Lease B during the year; but because Hard Luck intended to drill one more well on Lease B in the coming year, it decided that Lease B was only 40% impaired. With respect to the insignificant leases, past experience indicates that 70% of all unproved properties assessed on a group basis will eventually be abandoned. Hard Luck’s policy is to provide at year-end an allowance equal to 70% of the gross cost of these properties.
The allowance account had a balance of \($20,000\) at year end. Give the entries to record impairment.

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Significant Leases Lease A $300,000 Insignificant Leases Lease C $ 50,000 Lease B Total 350,000 Lease D 25,000 $650,000 Lease E 40,000 Lease F 30,000 Total $145,000