During the financial year 2020, JP Oil Ltd incurred the following Exploration and Evaluation costs in two areas of interest, Carnarvon and Bass: Carnarvon: $60,500 Bass: $90,000 Of the above expenditures, 75% relate to property, plant, and equipment and 25% relate to intangible assets. At the end of the 2020 financial year, economically recoverable oil reserves are discovered at the Carnarvon site, but the Bass site is abandoned. Following the discovery of oil at the Carnarvon site, roads and other fixed infrastructure are constructed during the 2021 financial year at a cost of $22,000. Production at the Carnarvon site starts at the beginning of the 2022 financial year. It is estimated that the Carnarvon site contains a total of 10,000 barrels of oil. The sales price of each barrel is $35. In 2022, 4,000 barrels of oil are extracted at a production cost of $22,000, of which 2,500 barrels are sold. Assets are amortized or depreciated on a production-output basis. Required: Using the area-of-interest method, provide the journal entries required for the financial years ending 2020, 2021, and 2022 to conform with the relevant AASB standards.

Assume that JP Oil Ltd’s rights to tenure for each area are current and that all Exploration and Evaluation costs are carried forward as assets to the extent possible under AASB 6 Exploration for and Evaluation of Mineral Resources. Narrations are not required.

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