ut of The following are costs incurred on Erath lease: Acquisition costs. Well 1 costs Well...

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ut of The following are costs incurred on Erath lease: Acquisition costs. Well 1 costs Well 2 costs Well 3 costs Tanks, separators, flow lines, etc. $ 100,000 2,250,000 3,000,000 2,750,000 1,000,000 REQUIRED: Treat each of the following independently: a. A fourth well, an exploratory well, was drilled at a cost of $2,010,000 and was determined to be dry. Give the entry to record the dry hole. b. Give the entry to record abandonment of Well 2. Equipment costing $50,000 was salvaged. Accumulated DD&A on wells and equipment was $5,000,000. Wells 1 and 3 are still producing. c. Give the entry to record abandonment of the entire Erath lease. Assume the lease constituted a separate amortization base with accumulated DD&A on leasehold costs of $40,000 and accumulated DD&A on wells and equipment of $5,000,000. d. Give the entry to record abandonment of the entire Erath lease, assuming instead that amortization had been computed on a field-wide basis with accumulated DD&A on leasehold costs of $300,000 and accumulated DD&A on wells and equipment of $18,000,000. Item a a b b b C O с C C d d d d Account 47 O 4) ( 0 Debit Credit ut of The following are costs incurred on Erath lease: Acquisition costs. Well 1 costs Well 2 costs Well 3 costs Tanks, separators, flow lines, etc. $ 100,000 2,250,000 3,000,000 2,750,000 1,000,000 REQUIRED: Treat each of the following independently: a. A fourth well, an exploratory well, was drilled at a cost of $2,010,000 and was determined to be dry. Give the entry to record the dry hole. b. Give the entry to record abandonment of Well 2. Equipment costing $50,000 was salvaged. Accumulated DD&A on wells and equipment was $5,000,000. Wells 1 and 3 are still producing. c. Give the entry to record abandonment of the entire Erath lease. Assume the lease constituted a separate amortization base with accumulated DD&A on leasehold costs of $40,000 and accumulated DD&A on wells and equipment of $5,000,000. d. Give the entry to record abandonment of the entire Erath lease, assuming instead that amortization had been computed on a field-wide basis with accumulated DD&A on leasehold costs of $300,000 and accumulated DD&A on wells and equipment of $18,000,000. Item a a b b b C O с C C d d d d Account 47 O 4) ( 0 Debit Credit

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Journal entries in the books of 1 Dry hole expense ac 2010000 Well in progress ac 2010000 2 Equ... View the full answer