Mars Petroleum owned the following unproved property at 12/31/57: Significant Leases Cost Impairment Insignificant Leases Cost Total
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Question:
Mars Petroleum owned the following unproved property at 12/31/57:
Significant Leases | Cost | Impairment | Insignificant Leases | Cost | Total Impairment |
Lease A | $340,000 | $140,000 | Lease C | $45,000 | |
Lease B | $490,000 | $150,000 | Lease D | $32,000 | |
Lease E | $25,000 | ||||
Lease F | $20,000 | ||||
$122,000 | $48,000 |
Requirement:
Prepare journal entries for 2058, assuming the following events:
a. Proved reserves were found on Lease A and Lease B.
b. Lease D was abandoned.
c. Lease F was sold for $22,000.
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