Cowboy Oil Corporation began operations in 2016. Give the entries, assuming the following transactions in the first three years of operations. Calculate DD&A twice, once assuming no exclusions and once assuming all possible exclusions from the amortization base. Ignore the ceiling test for 2016, but apply it for 2017 and 2018.

Calculate the ceiling test twice for each of those years, once assuming no exclusions and once assuming all possible exclusions from the amortization base. Assume all leases are located in the United States. You may combine entries. Note that problem 11 in chapter 5 is similar to this problem. Compare these two problems for a comparison of successful efforts and full cost accounting.

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Year Transaction 2016 Lease bonuses Lease A $ 50,000 Lease B $ 40,000 Lease C $ 55,000 G&G costs direct 60,000 50,000 90,000 Lease record maintenance 2,000 5,000 1,000 Legal costs for title defense 15,000 None 10,000 Drilling costs Well 1, exploratory Well 1 exploratory IDC None 300,000 150,000 Equipment None 125,000 40,000 Drilling Drilling results None Well dry uncompleted 2017 Delay rental 4,000 None None Well 1, Drilling costs exploratory Well 2, exploratory Well 1 IDC 275,000 225,000 60,000 Equipment 50,000 50,000 40,000 Drilling Drilling completed, Drilling completed, found Drilling results Installed flow lines, tanks, etc. Installation costs found PR of uncompleted PR of 100,000 bbl 300,000 bbl 5,000 None 3,000 Purchase costs 30,000 None 45,000 Future development costs 600,000 None 400,000 Production during year PV of future net revenue as of 12/31/17 4,000 bbl None 6,000 bbl FMV of Lease B = 500,000 $200,000 800,000