The following are costs incurred on Erath lease: REQUIRED: Treat each of the following independently: a. A
Question:
The following are costs incurred on Erath lease:
REQUIRED: Treat each of the following independently:
a. A fourth well, an exploratory well, was drilled at a cost of $2,010,000 and was determined to be dry. Give the entry to record the dry hole.
b. Give the entry to record abandonment of Well 2. Equipment costing $50,000 was salvaged. Accumulated DD&A on wells and equipment was $5,000,000.
Wells 1 and 3 are still producing.
c. Give the entry to record abandonment of the entire Erath lease. Assume the lease constituted a separate amortization base with accumulated DD&A on leasehold costs of $40,000 and accumulated DD&A on wells and equipment of $5,000,000.
d. Give the entry to record abandonment of the entire Erath lease, assuming instead that amortization had been computed on a field-wide basis with accumulated DD&A on leasehold costs of $300,000 and accumulated DD&A on wells and equipment of $18,000,000.
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