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Branch Oil Co, which uses the successful efforts method of accounting, owns an individually significant lease (unproved), with a cost of $350,000. On 12/31/18, the
Branch Oil Co, which uses the successful efforts method of accounting, owns an individually significant lease (unproved), with a cost of $350,000. On 12/31/18, the lease is not considered impaired. However, prior to completion of the audit and issuance of the financial statements, a well on adjacent property is abandoned as a dry hole, and the lease is now considered to be 30% impaired. Give any necessary adjusting entry at 12/31/18. (there should be 1 entry)
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