Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and601Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $bl. The rovalty interest is and the severance tax rate is 10%.bPrepare the revenue entries for Cameron Oil Company and Garcia Company.WellDays Produced302624Liberty Well 1Freedom Well A-1Total Production Sold2,900-measured at pointof delivery24-Hr Test (bbl)2035Dyson Powell50Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located inFayette County, Texas. Cameron Oil Company (70% WI) and Garcia Company (30% WI) own a joint working interest in theDowling Field. The expected selling price was $60/bbl. The royalty interest is 1/5 and the severance tax rate is 10%.Prepare the revenue entries for Cameron Oil Company and Garcia Company.

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60 Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas, Cameron Oil Company (70% WI) and Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $ bl. The rovalty interest is and the severance tax rate is 10%. 5 Prepare the revenue entries for Cameron Oil Company and Garcia Company. Well 24-Hr Test (bbl) Days Produced 30 20 35 26 Dyson Powell 50 24 Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $60/bbl. The royalty interest is 1/5 and the severance tax rate is 10%. Prepare the revenue entries for Cameron Oil Company and Garcia Company. Total Production Sold 2,900-measured at point of delivery Liberty Well 1 Freedom Well A-1

60 Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas, Cameron Oil Company (70% WI) and Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $ bl. The rovalty interest is and the severance tax rate is 10%. 5 Prepare the revenue entries for Cameron Oil Company and Garcia Company. Well 24-Hr Test (bbl) Days Produced 30 20 35 26 Dyson Powell 50 24 Assume the data above for the following wells commingled production in Tank Battery on the Premise Lease located in Fayette County, Texas. Cameron Oil Company (70% WI) and Garcia Company (30% WI) own a joint working interest in the Dowling Field. The expected selling price was $60/bbl. The royalty interest is 1/5 and the severance tax rate is 10%. Prepare the revenue entries for Cameron Oil Company and Garcia Company. Total Production Sold 2,900-measured at point of delivery Liberty Well 1 Freedom Well A-1

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter19: Lease Financing

Section: Chapter Questions

Problem 3P

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Prospect Oil Company sold a total of 1, 000Mc gas at $9/ Mcf. The lease provides a 1/5 RI. The working interest owners receives 100% of the revenue (net of 5% severance tax) and then distributes the amount due to the royalty interest owner. REQUIRED: Give the entry by Prospect to record the sale of the gas.
Stellar Drilling Company has leased property on which oil has been discovered. The oil wells on this property produced 18,400 barrels of oil during the past year that sold at an average sales price of $68 per barrel. Total oil resources of this property are estimated to be 227,500 barrels. The lease provided for an outright payment of $614,250 to the lessor (owner) before drilling could be commenced and an annual rental of $33,120. A premium of 5% of the sales price of every barrel of oil removed is to be paid annually to the lessor. In addition, Stellar (lessee) is to clean up all the waste and debris from drilling and to bear the costs of reconditioning the land for farming when the wells are abandoned. The estimated fair value, at the time of the lease, of this clean-up and reconditioning is $36,400. From the provisions of the lease agreement, compute the cost per barrel for the past year, exclusive of operating costs, to Stellar Drilling Company. (Round answer to 2 decimal places,…
Diderot Drilling Company has leased property on which oil has been discovered. The oil wells on this property produced 18,000 barrels of oil during the past year that sold at an average sales price of $55 per barrel. Total oil resources of this property are estimated to be 250,000 barrels. The lease provided for an outright payment of $500,000 to the lessor (owner) before drilling could be commenced and an annual rental of $31,500. A premium of 5% of the sales price of every barrel of oil removed is to be paid annually to the lessor. In addition, Diderot (lessee) is to clean up all the waste and debris from drilling and to bear the costs of reconditioning the land for farming when the wells are abandoned. The estimated fair value, at the time of the lease, of this clean-up and reconditioning is $30,000. Instructions From the provisions of the lease agreement, you are to compute the cost per barrel for the past year, exclusive of operating costs, to Diderot Drilling Company. (Round to…
ENG Oil Company produced and sold 30,000 barrels of oil during May 2020 at $60/bbl from lease A. The company has 4/5 revenue interest in the above lease with 60% working interest. North Oil Company is a non-operator working interest owner in Lease A. In addition, National Company purchased ORI in lease A. The severance tax rate applied is 5% and ENG reported a revenue of $810,000 for May sales. a. Prepare the journal entry for ENG to record the sale of the oil, given thatthe purchaser assumes the responsibility of distributing severance taxesand royalty income.b. Prepare the journal entry for ENG to record the sale of the oil, given thatENG assumes the responsibility and receives 100% proceeds.c. Prepare the journal entry for National Company to record the sale of oil.d. Prepare the journal entry for the royalty interest owner to record the saleof oil.e. Prepare the journal entry for the overriding interest owner to record thesale of oil.
ENG Oil Company produced and sold 30,000 barrels of oil during May 2020 at $60/bbl from lease A. The company has 4/5 revenue interest in the above lease with 60% working interest. North Oil Company is a non-operator working interest owner in Lease A. In addition, the National Company purchased ORI in lease A. The severance tax rate applied is 5% and ENG reported revenue of $810,000 for May sales. prepare the journal entry for the overriding interest owner to record the sale of oil.
Phelps Oil Wildcatters plc has leased property on which oil has been discovered. Wells on this property produced 36,000 barrels of oil during the past year, which sold at an average sales price of £65 per barrel. Total oil resources of this property are estimated to be 500,000 barrels. The lease provided for an outright payment of £1,200,000 to the lessor (owner) before drilling could be commenced and an annual rental of £62,000. A premium of 4% of the sales price of every barrel of oil removed is to be paid annually to the lessor. In addition, Phelps (lessee) is to clean up all the waste and debris from drilling and to bear the costs of reconditioning the land for farming when the wells are abandoned. The estimated fair value, at the time of the lease, of this clean-up and reconditioning is £50,000. a. From the provisions of the lease agreement, compute the cost per barrel for the past year, exclusive of operating costs, to Phelps. b. Compute the impact on Phelps' current year profit…
Phelps Oil Wildcatters plc has leased property on which oil has been discovered. Wells on this property produced 36,000 barrels of oil during the past year, which sold at an average sales price of £65 per barrel. Total oil resources of this property are estimated to be 500,000 barrels. The lease provided for an outright payment of £1,200,000 to the lessor (owner) before drilling could be commenced and an annual rental of £62,000. A premium of 4% of the sales price of every barrel of oil removed is to be paid annually to the lessor. In addition, Phelps (lessee) is to clean up all the waste and debris from drilling and to bear the costs of reconditioning the land for farming when the wells are abandoned. The estimated fair value, at the time of the lease, of this clean-up and reconditioning is £50,000. Instructions a. From the provisions of the lease agreement, compute the cost per barrel for the past year, exclusive of operating costs, to Phelps. b. Compute the impact on Phelps'…
Phelps Oil Wildcatters plc has leased property on which oil has been discovered. Wells on this property produced 36,000 barrels of oil during the past year, which sold at an average sales price of £65 per barrel. Total oil resources of this property are estimated to be 500,000 barrels. The lease provided for an outright payment of £1,200,000 to the lessor (owner) before drilling could be commenced and an annual rental of £62,000. A premium of 4% of the sales price of every barrel of oil removed is to be paid annually to the lessor. In addition, Phelps (lessee) is to clean up all the waste and debris from drilling and to bear the costs of reconditioning the land for farming when the wells are abandoned. The estimated fair value, at the time of the lease, of this clean-up and reconditioning is £50,000. Instructions c. Phelps is considering putting in a bid to lease an adjacent tract of land for development, based on some preliminary geological surveys and exploratory drilling. Advise…
COL Inc. can either purchase an equipment for $650,000 or lease it from LEN Inc. by making 12 annual lease payments (paid at the beginning of the year) of $89,600. The equipment has CCA rate of 20% and will have salvage value of $56,000 at the end of year 12. Assume this asset is the only asset in the asset class for both companies. LEN’s borrowing cost is 11% which is 1% lower than COL’s. COL and LEN have tax rate of 15% and 40% respectively. a) Calculate the NPV of leasing for COL. b) Calculate the NPV of leasing for LEN. c) Calculate the maximum and minimum annual lease payment acceptable to COL and LEN respectively.
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