Frank Energy Company entered into two test-well contribution agreements as follows:

a. On May 17, 2014, a bottom-hole agreement was obtained requiring a payment of $45,000 when the contract depth of 10,000 feet was reached. The contract depth was reached on September 21, 2014, and the required payment was made.

b. On September 30, 2014, a dry-hole test-well contribution was entered into, requiring payment of $50,000 if the well was dry but no payment if the well was successful.

1) Assume the well is successful.

2) Assume the well is dry.

What accounts were affected by the above transactions and by what amount?

Answer rating: 100% (QA)

A Dr Test well Contribution 45... View the full answer