Answered: Required : Prepare journal entries for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Alexander Company acquired the following three unexplored leases :

July 1, 2019 Lease A $ 500,000

August 15, 2019 Lease B $300,000

October 10 , 2019. Lease C $ 400,000

All leases are classified as individually significant .

a.On December 31, 2019, Lease A is determined to be 45% impaired. Lease B and C are not impaired.

b.On December 31, 2020, Lease A is determined to be impaired a total of 80%, Lease C, 50% Lease B is not impaired

c.On December 31, 2021, Lease A is considered to be 100% impaired and is abandoned. Lease B is 20% impaired and a well on Lease C found proved reserves.

Required :

Prepare journal entries for all of the above transactions except the initial purchase .

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