elta Oil Company Limited a successful effort accounting company has 2 3 leases in its unproved properties
Question:
elta Oil Company Limited a successful effort accounting company has leases in its unproved properties portfolio at December The lease together with the applicable impairment and acreage were summarized as follows
Average N
Lease B
Lease B
Lease B
Other leases in number
Cost N
Impariment N
Delta considers leases B B and B to be individually significant. The remaining leases are considered individually insignificant. During the following events occurred:
An exploratory well drilled on lease B resulted in a dry hole
The well drilled on lease B was successful
Drilled activities had not commenced on lease B but the result of a well drilled in a nearby property was unsuccessful
A lease with an original cost of N included in "other leases" was surrendered.
Experience shows that approximately of other leases will ultimately become productive and that the average holding period of the remaining leases is five years.
REQUIRED
a Prepare necessary journal entries
b Show the net carrying value of unproved properties at December for other leases
Financial Reporting and Analysis
ISBN: 978-1259722653
7th edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer