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

Exercise 22

Pessimistic Oil Corporation incurred the following costs during 2018:
a. Began drilling an exploratory-type stratigraphic test well, incurred $50,000 of IDC
b. Began drilling an exploratory-type stratigraphic test well, incurred $80,000 of IDC
and $10,000 in equipment costs
c. Began drilling a development-type stratigraphic test well, incurred $100,000 of IDC
d. Began drilling a development-type stratigraphic test well, incurred $200,000 of IDC
and $30,000 in equipment costs
The following results were obtained late in 2018:
a. The well was determined to be dry.
b. The well found proved reserves.
c. The well found proved reserves.
d. The well was determined to be dry.
Prepare the necessary entries.