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Sky Petroleum owned the following unproved property at 12/31/53: Significant Leases Cost Impairment Insignificant Leases Cost Total Impairment Lease A $330,000 $120,000 Lease C $40,000
Sky Petroleum owned the following unproved property at 12/31/53:
Significant Leases | Cost | Impairment | Insignificant Leases | Cost | Total Impairment |
Lease A | $330,000 | $120,000 | Lease C | $40,000 | |
Lease B | $470,000 | $140,000 | Lease D | $30,000 | |
Lease E | $25,000 | ||||
Lease F | $15,000 | ||||
$110,000 | $44,000 |
Requirement:
Prepare journal entries for 2054, assuming the following events:
a. Lease A was abandoned.
b. Proved reserves were found on Lease B and Lease D.
c. Lease F was impaired by an additional $2,000.
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