tal Well Liberty Well 1 Freedom Well A-1 *3 414 F7 MI F8 Total Production Sold 2,900-measured at point of delivery 24-Hr Test (bbl) Days Produced 20 30 35 26 Dyson Powell 50 24 Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $60/bbl. The royalty interest is 1/5 and the severance tax rate is 10%. Prepare the revenue entries for Cameron Oil Company and Garcia Company. acated in

tal Well Liberty Well 1 Freedom Well A-1 *3 414 F7 MI F8 Total Production Sold 2,900-measured at point of delivery 24-Hr Test (bbl) Days Produced 20 30 35 26 Dyson Powell 50 24 Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $60/bbl. The royalty interest is 1/5 and the severance tax rate is 10%. Prepare the revenue entries for Cameron Oil Company and Garcia Company. acated in

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 6PB: Underwoods Miners recently purchased the rights to a diamond mine. It is estimated that there are...

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7. Chavez Petroleum's lease in Wyoming produces both oil and gas. Additional information as of 1/1/19 follows: IDC..... Proved property costs, net L&WE. Beginning of year accumulated DD&A Estimated proved reserves, 12/31/19 $900,000 100,000 300,000 50,000 Oil ...... 200,000 bbl Gas Production during 2019 Oil 1,000,000 Mcf .... Gas. 10,000 bbl 300,000 Mcf REQUIRED: Compute amortization assuming the lease is fully developed: a. Assuming oil is the dominant mineral
The Manguino Oil Company incurred exploration costs in 2018 searching and drilling for oil as follows:Well 101 $ 50,000Well 102 60,000Well 103 80,000Wells 104–108 260,000Total $450,000It was determined that Wells 104–108 were dry holes and were abandoned. Wells 101, 102, and 103 weredetermined to have sufficient oil reserves to be commercially successful.Required:1. Prepare a summary journal entry to record the indicated costs assuming that the company uses the full-costmethod of accounting for exploration costs. All of the exploration costs were paid in cash.2. Prepare a summary journal entry to record the indicated costs assuming that the company uses the successfulefforts method of accounting for exploration costs. All of the exploration costs were paid in cash.
In this assignment you will need to perform an analysis on a hypothetical discovery based on the following information: Field Size 1.4 Tcf Production/Reserve Ratio 7% of the original field size starting producing year 3 Gas Price $3.5/Mcf CapEx $1/Mcf capitalized in 5 years, straight-line depreciation Operating Cost $0.8/Mcf Royalty 10% Government Take 40% Cost recovery limit 60% of gross revenue Discount Rate 10% Income Tax Rate 33% Allow cost recovery carry forward 1. Evaluate the discovery – you need to calculate the total worth, worth to the company, government take, value in terms of entitlement interest and working interest. 2. Evaluate the producing gas reserve – total worth, worth to the company, government take, value in terms of entitlement interest and working interest.
Evaluate the discovery – you need to calculate the total worth, worth to the company, government take, value in terms of entitlement interest and working interest. Field Size 1.4 Tcf Production/Reserve Ratio 7% of the original field size starting producing year 3 Gas Price $3.5/Mcf CapEx $1/Mcf capitalized in 5 years, straight-line depreciation Operating Cost $0.8/Mcf Royalty 10% Government Take 40% Cost recovery limit 60% of gross revenue Discount Rate 10% Income Tax Rate 33%
15. Tyler Oil Corporation estimates the following costs to acquire, drill, and complete a well on Lease A: Drilling and completion costs Acquisition costs Selling price of oil ($/bbl). Lifting costs ($/bbl). State severance tax rate $ 80,000 600,000 1,000 25 5% 20% Royalty interest REQUIRED: Would the investment be profitable if proved reserves are: a. 12,000 bbl? b. 18,000 bbl? c. 24,000 bbl?
16. MODULATE Co. has the following assets.Vacant building to be leased out under operating lease4,000,000Building being constructed for TO ADJUST, Inc.800,000Building under construction to be used as office1,600,000Building under construction to be rented out under operating lease400,000Building rented out to MODULATE’s employees who pay rent at market rates3,200,000Office building awaiting disposal200,000How much is the total investment property?Group of answer choices7,600,0004,200,0004,400,0004,600,000
d. Information that identifies and explains the amounts recognized in the financial statements arising from the exploration for and evaluation of mineral resources. (Adapted) Problem Solving: Solve the following. Show your solutions in good form. Problem 1: On January 1, 2018 Samar Company paid P5, 400, 000 for property containing natural resource of 2,000,000 tons of ore. The estimated discounted amount of restoring the land after the resource is exhausted isP450, 000 and the land will have a value of P650,000 after it is restored for suitable use. Tunnels, bunk houses and other fixed installation are constructed in the amount of P8, 000, 000. Such expenditures are to be charged to mine improvements. Operations began on January 1, 2019 and resource removed totaled 600,000 tons. During 2020, a discovery was made indicating that available resources after 2019 will total 1,875,000 tons. At the beginning of 2020, additional bunk houses were constructed in the amount of P770,000. In 2020,…
Exercise 3 The petroleum activities made by AOM Oil Corporation in exploring BAKT Basin are listed below: Tubing system costs AED 400,000 Shooting rights AED 300/acre for a total of 2000 acres. • Advanced seismic studies AED 291,000 • Depreciation of exploration machines AED 53,000 • Delay rental payment AED 450,050 Dry-hole contribution AED 190,00 Required: Provide below all journal entries.
4. A petroleum project involves production of crude oil from a 5,000,000 barrel reserve. Time zero mineral rights acquisition cost (lease bonus) of $2,000,000 isthe basis for cost depletion. Intangible drilling expenses of $1,500,000 will be incurred in time zero. Tangible producing equipment costing $3,000,000 at time zero will go into service in year one and be depreciated using double declining balance (on the 7-year depreciation basis considering first full year of use). Production is estimated to be 350,000 barrels per year. Well-head crude oil value before transportation cost is estimated to be $42.0o per barrel in year one, $43.00o per barrel in year two, and $44.0o per barrel in year three. Royalties are 10.0% of revenues (well-head value) each year. Operating costs are expected to be $3,000,000 in year one, $3,300,000 in year two, and $3,600,000 in year three. The allowable percentage depletion is 15.0%. The effective income tax rate is 40.0%. The investor has other taxable…
Required information [The following information applies to the questions displayed below.] Last Chance Mine (LCM) purchased a coal deposit for $2,088,450. It estimated it would extract 17,550 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.15 million, $4.35 million, and $3.1 million for years 1 through 3, respectively. During years 1-3, LCM reported net income (loss) from the coal deposit activity in the amount of ($15,400), $667,500, and $662,500, respectively. In years 1-3, LCM extracted 18,550 tons of coal as follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.) (1) Tons of Coal 17,550 (2) Basis $2,088,450 Depletion (2)/(1) Rate $119.00 Year 1 2,400 Tons Extracted per Year Year 2 11,450 Year 3 4,700 c. Using the cost and percentage depletion computations from parts (a) and (b), what is LCM's actual depletion expense for each year? Depletion Expense Year 1 Year 2 $…
Required information. [The following information applies to the questions displayed below.) Last Chance Mine (LCM) purchased a coal deposit for $2,305,050. It estimated it would extract 18,150 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.18 million, $4.5 million, and $3.3 million for years 1 through 3, respectively. During years 1-3, LCM reported net income (loss) from the coal deposit activity in the amount of ($11,500), $737,500, and $647,500, respectively. In years 1-3, LCM extracted 19,150 tons of coal as follows: (1) Tons of Coal (2) Banis $2,305,050 Depletion (2)/(1) Rate $127.00 Tons Extracted per Year Year 1 2,300 Year 2 11,350 Year 3 5,500 18.150 Note: Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars. c. Using the cost and percentage depletion computations from parts (a) and (b), what is LCM's actual depletion expense for each year? Answer is complete but not entirely…
Review Question El Dorado Limited This company convened a meeting of its managers and informed them of an opportunity for investment in Lala land . The management accounting department was asked to study and recommend whether this investment is going to be profitable or not . They provide them with the following details: TABLE 1 Capital Expenditure involved $70000 Maturity period iof the project 4 yrs Revenue $18000 Salary expense $5000 Lease expense annually $3500 Supplies expense $1500 Maintenance expense $900 Utilities $1200 Cost of capital 10% Salvage value 34000 Tax rate 25% The company will need to spend $6200 on net working capital but this sum will be returned at the end of the period. The estimated sale of the capital asset at the end of the project will be $20000. The company can sublet part of the facilities for $2000 yearly during the project . The capital expenditure is depreciated using straight…