Homework Answers
Answer:
a)
Entry for Abandonment of Lease Alpha:
Allowance for impairment A/c Dr. $ 300000
Loss on abandonment A/c Dr. $ 550000
To unproved property - lease alpha $ 850000
(being lease alpha abandoned)
Note: any amount excess of impairment allowance will be booked as loss in case property is significant.
Entry for Abandonment of Lease Beta:
Allowance for impairment Group basis A/c Dr. $ 45000
To unproved property - lease Beta $ 45000
(being lease Beta abandoned)
Note: all the cost is charged to impairment allowance in case of insignificant property.
b)
if the unproved lease becomes proved:
entry in case of lease alpha:
Allowance for impairment A/c Dr. $ 300000
Proved Property - lease alpha (Significant) A/c Dr. $ 550000
To unproved property - lease alpha $ 850000
(Being Unproved property transferred to proved property)
Note: net carrying cost i.e. Gross acquisition cost - impairment allowance will be transferred to proved property account in case of significant property.
Entry in case of lease alpha:
Proved Property - lease Beta (insignificant) A/c Dr. $ 45000
To unproved property - lease Beta $ 45000
(Being Unproved property transferred to proved property)
Note: gross acquisition cost is transferred to proved property account in case of insignificant property.
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The following data for Pax Petroleum relates to unproved property: • Unproved property-Lease Alpha (significant) ......
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22. As of 12/31/18, Bruno Energy Corporation owned the following unproved property: Individually Individually Significant Leases Insignificant Leases Cost Allowance Cost Total Allowance Lease A $350,000 $200,000 Lease C $12,000 Lease B 600,000 250,000 Lease D 30,000 Lease E 15,000 Lease F 10,000 $67,000 $42,000 REQUIRED: Prepare journal entries for 2019, assuming the following events: a. Found proved reserves on Leases A & B. b. Found proved reserves on Lease D. c. Found proved reserves on Lease C.
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Pharoah Leasing Company agrees to lease equipment to Novak
Corporation on January 1, 2020. The following information relates
to the lease agreement.
1.
The term of the lease is 7 years with no renewal option, and
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2.
The cost of the machinery is $525,000, and the fair value of
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3.
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Kurtz Fencing Inc. uses a job order cost system. The following data summarize the operations related...
Kurtz Fencing Inc. uses a job order cost system. The following
data summarize the operations related to production for March, the
first month of operations:
1. Journalize the entries to record the summarized operations.
Record each item (items a-f) as an individual entry on March 31.
Record item g as 2 entries. Refer to the chart of accounts for the
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A review of the ledger of ABC Inc. at December 31 produces the following data for...
A review of the ledger of ABC Inc. at December 31 produces the
following data for the preparation of annual adjusting
entries:
1.
Salaries and Wages Payable, $0. There are 8 salaried employees.
6 employees receive a salary of $1,250 each per week, and 2
employees earn $680 each per week. Employees do not work weekends.
All employees worked two days after the last pay period and before
December 31.
2.
Unearned Rent Revenue, $443,320. The company began subleasing
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SPECIFIC REQUIREMENTS: 1) Provided on the next page is the trial balance of the RoyalCrest Golf...
SPECIFIC REQUIREMENTS: 1) Provided on the next page is the trial balance of the RoyalCrest Golf Club, Inc. as of December 31, 2019. They prepare adjusting entries and close their books annually on December 31". Create T-accounts (or general ledger accounts) for each account listed in the trial balance, and enter the balances from the trial balance into your T-accounts (or general ledger accounts) --- and allow a few lines per account. (FYI: I recommend using T-accounts due to their...
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ESR-ANTE Exercise 3 (6 marks) On December 2012, Petronas Corporation (PC) had a balance of 1 5000 AED for the unproved property account for a group of individually insignificant leases. The impairment allowance account had a balance of AED 2000 Record the entries for each of the following transactions and show your steps 1, PC has a policy in 2012 of maintaining a 40% impairment allowance. 2. In January 2013, PC decided to surrender leases for AED 2500. 3. PC...
Pharoah Leasing Company agrees to lease equipment to Novak
Corporation on January 1, 2020. The following information relates
to the lease agreement.
1.
The term of the lease is 7 years with no renewal option, and
the machinery has an estimated economic life of 9 years.
2.
The cost of the machinery is $525,000, and the fair value of
the asset on January 1, 2020, is $713,000.
3.
At the end of the lease term, the asset reverts to the...
During 2018, Longhorn Petroleum made the following transactions relating to test well contributions: a. Contracted with King Energy Corporation, agreeing to pay $80,000 if a well was drilled on Garth's lease to a depth of 20,000 feet. b. Contracted to pay Richards Oil Company $65.000 if a well being drilled on Varsity's property was dry. c. Agreed to pay Carnegie Oil Company $110,000 if a well being drilled reached a depth of 9,000 feet Results from the above transactions were...
Kurtz Fencing Inc. uses a job order cost system. The following
data summarize the operations related to production for March, the
first month of operations:
1. Journalize the entries to record the summarized operations.
Record each item (items a-f) as an individual entry on March 31.
Record item g as 2 entries. Refer to the chart of accounts for the
exact wording of the account titles. CNOW journals do not use lines
for spaces or journal explanations. Every line on...
A review of the ledger of ABC Inc. at December 31 produces the
following data for the preparation of annual adjusting
entries:
1.
Salaries and Wages Payable, $0. There are 8 salaried employees.
6 employees receive a salary of $1,250 each per week, and 2
employees earn $680 each per week. Employees do not work weekends.
All employees worked two days after the last pay period and before
December 31.
2.
Unearned Rent Revenue, $443,320. The company began subleasing
condos...
I need answers for my reviewer.
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