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Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright
Edition 5ISBN: 9781630181031Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright
Edition 5ISBN: 9781630181031 Exercise 7
During 2015, Prosperity Oil Company acquired the following leases: 
In acquiring and exploring these leases, Prosperity Oil Company incurred the following
additional costs:
Prosperity Oil allocates internal costs relating to lease acquisition to specific leases.
Assuming Lease A was abandoned at the end of the year, answer the following
questions:
a. What was the total nondrilling exploration expense for all three leases for the year?
b. What was the surrendered lease expense?
c. How much was capitalized as unproved property for Lease B?
Hint: Some of these costs must be allocated to the individual leases on some
reasonable basis.
In acquiring and exploring these leases, Prosperity Oil Company incurred the followingadditional costs:
Prosperity Oil allocates internal costs relating to lease acquisition to specific leases.Assuming Lease A was abandoned at the end of the year, answer the following
questions:
a. What was the total nondrilling exploration expense for all three leases for the year?
b. What was the surrendered lease expense?
c. How much was capitalized as unproved property for Lease B?
Hint: Some of these costs must be allocated to the individual leases on some
reasonable basis.
Explanation
Verified
Verified
P Oil Company acquired lease A B and C. ...
Fundamentals of Oil & Gas Accounting 5th Edition by Rebecca Gallun, Charlotte Wright
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