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

Exercise 1

Baseline Petroleum, a successful efforts company, entered the oil and gas business in
2014 with the acquisition of one field. Baseline proved the field during 2014. At the end
of 2014, prices were high and costs low. During 2015, Baseline continued exploration
and development activities in the field, but towards the end of 2015, oil and gas
prices plummeted. During 2016, due to continued low prices, Baseline suspended all
exploration and development activities. Prices at the end of 2016 declined significantly
once again. Data for Baseline's one field are as follows: REqUIRED: Make any necessary journal entries for the above years relating to
impairment.