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Khowla Oil Company, uses successful cost approach, decided to explore some acreage in Eastern side of KSA before acquiring any leases. Khowla obtained shooting rights
Khowla Oil Company, uses successful cost approach, decided to explore some acreage in Eastern side of KSA before acquiring any leases. Khowla obtained shooting rights only for $20,000 on 10,000 acres owned by Thra and obtained shooting right coupled with an option to lease for $30,000 on 10,000 acres owned by Bayan. The entry to record the leasing of 5,000 acres from Bayan assuming that the original cost is not apportioned and Khowla Oil Company did not apportion the amount in the suspense account based on the acreage leased include: A. A debit to unproved property of $15,000 B. A debit to Property purchase suspense of $30,000 C. A credit to property purchase suspense of $30,000 OD. A debit to surrender lease expenses of $15,000
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