Bartz Oil Company aquired the shooting rights on 25,000 acres at a cost of $1.00/acre on...
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Bartz Oil Company aquired the shooting rights on 25,000 acres at a cost of $1.00/acre on June 1, 2019. Bartz contract and paid $98,000 for a reconnaissance survey during 2019. As a result of this broad exploration study, Lease A and Lease B were leased on January 23, 2020. (Ignore acquisition costs.) Detailed surveys vostig a total of $41,000 were done during January and February on the leases. During July, Bartz entered into two test-well contribution agreements: a bottom-hole contribution agreement for $15,000, with a specified depth of 11,000 feet, and a dry-hole contribution of $20,000, also with a specified deoth of 11,000 feet. In November, both wells were drilled to 11,000 feet. The well with the bottom-hole contribution was successful, but the well with the dry-hole contribution was dry. The cost for maintaining land and lease records allocated to these two properties for 2020 was $2,000. Ad valorem taxes were assessed on Bartz's economic interest in both properties, amounting to $2,500 for 2020. In April, 2021, Bartz made the decision to go ahead and drill a well on Lease B. Before drilling the well, costs of $17,000 were incurred to successfully defend a title suit concerning Lease B. Additional Information: - Assume Lease A has a $1,000 delay rental clause. - Assume Lease B has a $2,000 delay rental clause. - Assume records maintenance costs recur in 2021 at 2020 levels. - Assume ad valorem taxes recur in 2021 at 2020 levels. REQUIRED: Use the information above to fill in the payment of any applicable non-drilling emploratory costs in the chart below: G&G Expense Test Well Contribution Expense Records Maintenance Expense Ad valorem Tax Expense Legal Expense Delay Rental Expense 2019 2020 2021 Bartz Oil Company aquired the shooting rights on 25,000 acres at a cost of $1.00/acre on June 1, 2019. Bartz contract and paid $98,000 for a reconnaissance survey during 2019. As a result of this broad exploration study, Lease A and Lease B were leased on January 23, 2020. (Ignore acquisition costs.) Detailed surveys vostig a total of $41,000 were done during January and February on the leases. During July, Bartz entered into two test-well contribution agreements: a bottom-hole contribution agreement for $15,000, with a specified depth of 11,000 feet, and a dry-hole contribution of $20,000, also with a specified deoth of 11,000 feet. In November, both wells were drilled to 11,000 feet. The well with the bottom-hole contribution was successful, but the well with the dry-hole contribution was dry. The cost for maintaining land and lease records allocated to these two properties for 2020 was $2,000. Ad valorem taxes were assessed on Bartz's economic interest in both properties, amounting to $2,500 for 2020. In April, 2021, Bartz made the decision to go ahead and drill a well on Lease B. Before drilling the well, costs of $17,000 were incurred to successfully defend a title suit concerning Lease B. Additional Information: - Assume Lease A has a $1,000 delay rental clause. - Assume Lease B has a $2,000 delay rental clause. - Assume records maintenance costs recur in 2021 at 2020 levels. - Assume ad valorem taxes recur in 2021 at 2020 levels. REQUIRED: Use the information above to fill in the payment of any applicable non-drilling emploratory costs in the chart below: G&G Expense Test Well Contribution Expense Records Maintenance Expense Ad valorem Tax Expense Legal Expense Delay Rental Expense 2019 2020 2021
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GG Expense 98000 2019 41000 2020 139000 Test Well Contri... View the full answer
Related Book For
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
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