Question
Moon Oil Company owned the following unproved property at 12/31/20: Significant Leases Cost Impairment Insignificant Leases Cost Total Impairment Lease A $350,000 $150,000 Lease C
Moon Oil Company owned the following unproved property at 12/31/20:
Significant Leases | Cost | Impairment | Insignificant Leases | Cost | Total Impairment |
Lease A | $350,000 | $150,000 | Lease C | $25,000 | |
Lease B | $450,000 | $120,000 | Lease D | $35,000 | |
Lease E | $18,000 | ||||
Lease F | $12,000 | ||||
$90,000 | $40,000 |
Requirement:
Prepare journal entries for 2021, assuming the following events:
a. Lease A was abandoned.
b. Lease B was partially impaired by an additional $30,000.
c. Proved reserves were found on Lease D and Lease F.
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Accounting Theory Conceptual Issues in a Political and Economic Environment
Authors: Harry Wolk, James Dodd, John Rozycki
8th edition
1412991692, 978-1412991698
