Sunrise Oil owns a 100% working interest in an oil and gas lease. The Royalty on the lease is 12.5%, which is owned by the Whittenburg Family Trust. Sunrise sells 100% of its interest to Beltway Oil & Gas reserving 1/8 interest but will pay none of the operating expenses. In March 2022 Beltway Oil & Gas produces 1,500 barrels (BBLS) of oil and sell 975 BBLs of oil at $88 per BBL. Beltway Oil incurs $37,000 in lease operating
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- Jaimson Energy operates a lease in Hutchinson County, Texas. The lease is burdened with a 1/8 royalty interest held by the Burnett Family Trust. Prior to the first sale of oil Jaimson Energy assigns an overriding royalty interest of 6.25% of its 87.5% net revenue interest to Sunset Oil. Following the assignment, Jaimson Energy produces 1,500 barrels of oil in March 2022 and sells 975 barrels. The severance tax is 5%, lease operating expenses totaled $35,000 and price per BBL is $99. Record the sale for the Burnett Family Trust. How much of the lease operating expenses does Sunset Oil pay?Paar Corporation bought 100 percent of Kimmel, Inc., on January 1, 2018. On that date, Paar’s equipment (10-year remaining life) has a book value of $362,500 but a fair value of $499,000. Kimmel has equipment (10-year remaining life) with a book value of $284,000 but a fair value of $419,000. Paar uses the equity method to record its investment in Kimmel. On December 31, 2020, Paar has equipment with a book value of $253,750 but a fair value of $411,250. Kimmel has equipment with a book value of $198,800 but a fair value of $366,300. What is the consolidated balance for the Equipment account as of December 31, 2020? Multiple Choice $452,550. $587,550. $777,550. $547,050.Gage Co. purchases land and constructs a service station and car wash for a total of P540,000. At January 2, 2018, when construction is completed, the facility and land on which it was constructed are sold to a major oil company for P600,000 and immediately leased from the oil company by Gage. Fair value of the land at time of the sale was P60,000. The lease is a 10-year, noncancellable lease. Gage uses straight-line depreciation for its other various business holdings. The economic life of the facility is 15 years with zero salvage value. Title to the facility and land will pass to Gage at termination of the lease. A partial amortization schedule for this lease is as follows: Payment Interest Amortization Balance Jan. 2, 2018 600,0000 Dec. 31, 2018 97,646.71 60,000.00 37,646.71 562,353.29 Dec. 31, 2019 97,646.71 56,235.33 41,411.38 520,941.91 Dec. 31, 2020 97,646.71 52,094.19 45,552.52 475,389.39 From the…
- Gage Co. purchases land and constructs a service station and car wash for a total of P540,000. At January 2, 2018, when construction is completed, the facility and land on which it was constructed are sold to a major oil company for P600,000 and immediately leased from the oil company by Gage. Fair value of the land at time of the sale was P60,000. The lease is a 10-year, noncancellable lease. Gage uses straight-line depreciation for its other various business holdings. The economic life of the facility is 15 years with zero salvage value. Title to the facility and land will pass to Gage at termination of the lease. A partial amortization schedule for this lease is as follows: Payment Interest Amortization Balance Jan. 2, 2018 600,0000 Dec. 31, 2018 97,646.71 60,000.00 37,646.71 562,353.29 Dec. 31, 2019 97,646.71 56,235.33 41,411.38 520,941.91 Dec. 31, 2020 97,646.71 52,094.19 45,552.52 475,389.39 The total lease-related income recognized by the lessee during…Crane Co. purchases land and constructs a service station and car wash for a total of $532500. At January 2, 2021, when construction is completed, the facility and land on which it was constructed are sold to a major oil company for $590000 and immediately leased from the oil company by Crane. Fair value of the land at time of the sale was $58500. The lease is a 10-year, noncancelable lease. Crane uses straight-line depreciation for its other various business holdings. The economic life of the facility is 15 years with zero salvage value. Title to the facility and land will pass to Crane at termination of the lease. A partial amortization schedule for this lease is as follows: Payments Interest Amortization Balance Jan. 2, 2021 $590000.00 Dec. 31, 2021 $96019.78 $59000.00 $37019.78 552980.22 Dec. 31, 2022 96019.78 55298.02 40721.76 512258.46 Dec. 31, 2023 96019.78 51225.85 44793.93 467464.53 What is the amount of the…Accounting Sunrise Oil owns a 100% working interest in an oil and gas lease. The Royalty on the lease is 12.5%, which is owned by the Whittenburg Family Trust. Sunrise sells 100% of its interest to Beltway Oil & Gas reserving 1/8 interest but will pay none of the operating expenses. In March 2022 Beltway Oil & Gas produces 1,500 barrels (BBLS) of oil and sell 975 BBLs of oil at $88 per BBL. Beltway Oil incurs $37,000 in lease operating expenses. A. What type of interest has Beltway Oil & Gas acquired? B. What type of interest has Sunrise Oil retained? C. What is the gross revenue to the royalty owner? D. What is the gross revenue to the working interest owner? E. What portion of the lease operating expenses will Beltway Oil & Gas Pay?
- Harper, Inc., acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2020, for $242,500 in cash. The book value of Kinman's net assets on that date was $425,000, although one of the company's buildings, with a $62,800 carrying amount, was actually worth $119,050. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $125,000. Kinman sold inventory with an original cost of $37,800 to Harper during 2020 at a price of $54,000. Harper still held $23,550 (transfer price) of this amount in inventory as of December 31, 2020. These goods are to be sold to outside parties during 2021. Kinman reported a $44,200 net loss and a $23,100 other comprehensive loss for 2020. The company still manages to declare and pay a $16,000 cash dividend during the year. During 2021, Kinman reported a $58,600 net income and declared and paid a cash dividend of $18,000. It made additional inventory sales…Harper, Inc., acquires 40 percent of the outstanding voting stock of Kinman Company on January 1, 2020, for $347,200 in cash. The book value of Kinman's net assets on that date was $680,000, although one of the company's buildings, with a $64,800 carrying amount, was actually worth $117,800. This building had a 10-year remaining life. Kinman owned a royalty agreement with a 20-year remaining life that was undervalued by $135,000. Kinman sold inventory with an original cost of $77,700 to Harper during 2020 at a price of $111,000. Harper still held $24,900 (transfer price) of this amount in inventory as of December 31, 2020. These goods are to be sold to outside parties during 2021. Kinman reported a $45,600 net loss and a $24,200 other comprehensive loss for 2020. The company still manages to declare and pay a $13,000 cash dividend during the year. During 2021, Kinman reported a $49,600 net income and declared and paid a cash dividend of $15,000. It made additional inventory sales…Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute the amount of goodwill, using full-goodwill or fair value basis approach.
- Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute the amount of goodwill, using full-goodwill or fair value basis approach: Group of answer choices None of the given P360,000 None P480,000Senpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute the amount of goodwill, using full-goodwill or fair value basis approach: a. 480,000 b. 360,000 c. None of the given d. NoneSenpai Company acquires 15% of Kohai Company’s common stock for P600,000 cash and carries the investment using the cost model. A few months later, Senpai purchases another 60% of Kohai Company’s stock for P2,592,000. At that date, Kohai Company reports identifiable assets with a book value of P4,680,000 and a fair value of P6,120,000, and it has liabilities with a book value and fair value of P2,280,000. The fair value of the 25% non-controlling interest in Kohai Company is P1,080,000. Compute for the amount of goodwill, using partial goodwill or proportionate basis approach: a. None b. 480,000 c. None of the given d. 360,000