Lamar Petroleum started its oil and gas exploration and production business by acquiring leases in both the United States and Canada. Data for 2018 and 2019 follow:

REQUIRED:

a. Record the above information for both years. Ignore revenue entries.

b. Compute and record DD&A for both years. Assume the revenue method may be ignored in the second year. If there is not a significant difference between the revenue basis and energy basis in the first year (less than $150,000), use the energy basis (equivalent thousand cubic feet). Assume that all possible costs are included in DD&A.

c. Compute DD&A using a common unit of measure based on thousand cubic feet, assuming Lamar Oil Company used successful efforts accounting instead of full cost accounting.

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$300,000 Year 2018 Leasehold costs Well number IDC Lease A (US) $ 40,000 Well 1 Lease B (US) Lease C (Canada) $ 30,000 Well 1 $500,000 L&WE $0 $350,000 Results Well dry, Proved abandon well Future development costs $200,000 Production: Oil 4,000 bbl Gas 20,000 Mcf Estimated reserves Oil, PR-12/31/18 Gas, PR 12/31/18 Oil, PDR-12/31/18 Gas, PDR-2/31/18 Selling price: Oil Price (12/31/18): Gas Oil Gas Well 2 2019 Leasehold costs Well number 50,000 bbl 300,000 Mcf 30,000 bbl 200,000 Mcf $130/bbl $ 10/Mcf $120/bbl $13/Mcf $60,000 Well 1 $600,000 $400,000 IDC $400,000 L&WE $300,000 Results Proved Future development costs $100,000 $150,000 Proved $175,000 Production: Oil 5,000 bbl 8,000 bbl 8,000 bbl Gas 20,000 Mcf 30,000 Mcf Estimated reserves Oil, PR-12/31/19 Gas, PR-12/31/19 Oil, PDR-12/31/19 Gas, PDR-12/31/19 40,000 bbl 40,000 bbl 80,000 bbl 250,000 Mcf 280,000 Mcf 30,000 bbl 28,000 bbl 30,000 bbl 200,000 Mcf 180,000 Mcf