Young Oil Company drills Well No. I at a cost of $210,000. The well is successful....

    

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Young Oil Company drills Well No. I at a cost of $210,000. The well is successful. Estimated proved reserves total 100,000 barrels, and proved developed reserves are 50,000 barrels. During 2019 and 2020, 3.750 bbl/year are produced and sold for $80/bbl. Operating costs are $20/bbl. Ignore severance tax and assume reserve estimates do not change. REQUIRED: Compute payout. Prepare all of the entries that would be made by both George Company and Young Oil Company during 2018, 2019, and 2020, assuming both companies are successful efforts companies. 25. Harper Oil Company, a successful efforts company, has an undeveloped lease for which it paid $180,000. The property was individually significant, and individual impairment of $50,000 had been assessed. 27. REQUIRED: Make the journal entries to record Harper Oil Company's convey- ance of 60% of the working interest in return for: a. $30,000 cash b. $200,000 cash 26. Richards Oil Company, a successful efforts company, has an undeveloped property for which it paid $80,000. The property is not considered to be individually significant. REQUIRED: Make the journal entries to record Richards Oil Company's conveyance of 30% of the working interest in return for: a. $30,000 cash b. $100,000 cash Batoh G Inompany has an unproved lease for which it paid Batoh 19. Zinc Company acquired 100% of the working interest in an unproved property at a cost of $100,000. Zinc later sold the working interest, retaining an overriding royalty interest (ORI). REQUIRED: Give the entry to record the conveyance of the working interest, assuming Zinc is a successful efforts company and received $80,000. 12. Zeke Company owns a proved property with the following costs: Leasehold.... IDC..... Equipment. Total accumulated DD&A... (separate amortization base) Zeke Company sells 100% of the working interest in the property to Torrance Company for $700,000. $100,000 600,000 200,000 300,000 REQUIRED: a. Give the entry for Zeke Company to record the sale assuming that Zeke uses the successful efforts method. b. Give the entry for Zeke Company to record the sale assuming the property had sold for $400,000. c. Give the entry for part a and part b, assuming Zeke Company is a full cost company and the reserves sold constitute 15% of Zeke's share of reserves in the cost center. Young Oil Company drills Well No. I at a cost of $210,000. The well is successful. Estimated proved reserves total 100,000 barrels, and proved developed reserves are 50,000 barrels. During 2019 and 2020, 3.750 bbl/year are produced and sold for $80/bbl. Operating costs are $20/bbl. Ignore severance tax and assume reserve estimates do not change. REQUIRED: Compute payout. Prepare all of the entries that would be made by both George Company and Young Oil Company during 2018, 2019, and 2020, assuming both companies are successful efforts companies. 25. Harper Oil Company, a successful efforts company, has an undeveloped lease for which it paid $180,000. The property was individually significant, and individual impairment of $50,000 had been assessed. 27. REQUIRED: Make the journal entries to record Harper Oil Company's convey- ance of 60% of the working interest in return for: a. $30,000 cash b. $200,000 cash 26. Richards Oil Company, a successful efforts company, has an undeveloped property for which it paid $80,000. The property is not considered to be individually significant. REQUIRED: Make the journal entries to record Richards Oil Company's conveyance of 30% of the working interest in return for: a. $30,000 cash b. $100,000 cash Batoh G Inompany has an unproved lease for which it paid Batoh 19. Zinc Company acquired 100% of the working interest in an unproved property at a cost of $100,000. Zinc later sold the working interest, retaining an overriding royalty interest (ORI). REQUIRED: Give the entry to record the conveyance of the working interest, assuming Zinc is a successful efforts company and received $80,000. 12. Zeke Company owns a proved property with the following costs: Leasehold.... IDC..... Equipment. Total accumulated DD&A... (separate amortization base) Zeke Company sells 100% of the working interest in the property to Torrance Company for $700,000. $100,000 600,000 200,000 300,000 REQUIRED: a. Give the entry for Zeke Company to record the sale assuming that Zeke uses the successful efforts method. b. Give the entry for Zeke Company to record the sale assuming the property had sold for $400,000. c. Give the entry for part a and part b, assuming Zeke Company is a full cost company and the reserves sold constitute 15% of Zeke's share of reserves in the cost center.

Answer rating: 100% (QA)

SOLUTION a Harper Oil Company conveys 60 of the working interest in the property for 30000 cash Cash 30000 Impairment Loss 50000 Oil and Gas Property 180000 Gain on Conveyance 10000 b Harper Oil Compa... View the full answer