Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright

تمرين 10

Hein Oil Company, a successful efforts company, owns 100% of the working interest in
a proved property that has the following capitalized costs: A 1/8 royalty on the property is owned by Sammy Jones. Hein sells the working interest
for $1,200,000 and retains a production payment interest of $300,000. The production
payment interest is payable from the proceeds from 30% of the working interest
share of production. The fair market value of the entire original working interest is
$1,500,000.
Prepare the journal entry by Hein to record the above transaction, assuming that
payment of the production payment interest is not reasonably assured.