Four companies own adjacent leases that share a common reservoir. The companies each have a 100% working interest in their respective leases in which they have the following investment:

The companies decide to unitize in order to obtain improved operating efficiency.
Following negotiations by engineers, geologists, and others, the following participation factors and market values were agreed upon:

REQUIRED:

a. Determine equalization of investment and prepare entries for all the parties, assuming all of the companies are successful efforts companies.

b. Give the entries, assuming Company D is a full cost company.

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Company A B D IDC $200,000 100,000 300,000 0 $600,000 L&WE $ 80,000 60,000 150,000 0 $290,000 Leasehold $ 30,000 20,000 40,000 50,000 $140,000 Total $ 310,000 180,000 490,000 50,000 $1,030,000