Question # 2 (19 marks) Answer the following independent cases. A. CWR Company maintains two groups of individually insignificant unproved properties, onshore and offshore. During 2018, CWR acquired 7 new offshore leases for $1,520,000 and 22 new onshore leases for $500,000. The company has a success rate of 64% for proving insignificant offshore unproved properties and an impaiment rate of 52% for insignificant onshore unproved properties. The average time for evaluating offshore properties is four years and three years for onshore properties. Compute the impairment of the unproved properties. (4 marks) B. In 2019, Omax Company entered into a bottom-hole agreement that requires a payment of OR 6,300 when the contract depth of 10,000 feet is reached. The contract depth was reached during 2019. Prepare the joumal entry. (2 marks) C. North Company incurred the following costs during the calendar year 2020: Production costs S 50,000 G&G studies 60,000 Dry-hole costs of an exploratory well 1,400,000 Successful exploratory well costs 800,000 Journalize the above costs using the full cost method of accounting. (8 marks) D. South Oil Company began operations on April 1, 2017. The following costs for Lease A. The company uses straight-line and successful efforts methods of accounting, Compute net income for the year ended December 31, 2017. (5 marks) G&G costs OR 240,000 Acquisition costs 400,000 Exploratory dry holes 5,600,000 Exploratory wells, successful 3,200,000 Production costs 200,000 Annual depreciation, depletion, and amortization (exploration) 160,000 Revenue 1,000,000 3