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

Exercise 3

Grover Petroleum owns a piece of equipment, originally costing $60,000, that is
currently being used on Lease A. Grover Petroleum owns a 40% working interest
in Lease A and serves as the operator of the lease. The company plans to use the
equipment on a lease wholly owned by Grover Petroleum. The equipment is transferred
to the company's warehouse.
REqUIRED: Prepare the entry to record the transfer under each of the following
independent situations:
a. The equipment is in Condition B and originally was Condition A when transferred
to the property. The current market price is $80,000.
b. The equipment is in Condition C, and Grover Petroleum will pay for the
reconditioning. The current market price is $80,000.