Q6: A company purchased a land at a cost of $800,000 on which oil has been discovered. The land required some construction preparation costing $200,000. After the oil extraction has occurred, the company must restore the land (estimated fair value of the obligation is $160,000), after which it can be sold for $320,000. The company estimates that 4,000 barrels of oil can be extracted. If 700 barrels are extracted and sold during the first year, prepare the journal entry to record depletion. 11-42