Ajax Oil Company, a successful efforts company, acquired a working interest in a lease in Oklahoma that cost Ajax $100,000.The lease is unproved and individually significant.Ajax has previously recorded $30,000 of impairment on the lease.

(a)Should gain or loss be recorded on the sale of a 50% interest in the lease for $60,000 and why?

(b)Discuss the two ways of accounting for the sale in (a) above if the 50% interest was sold for $10,000 instead of $60,000.