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FAR question


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#1 amrdowidar

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Posted 01 April 2014 - 10:02 PM

Dear CPA's,

 

I want explanation for this question  on Becker

 

Rill Co ownes 20% royalty intrest in an oil well, Rill receives royality payments on january 31 for the oil sold between the previous June 1 and November 30, and on July 31 for oil sold between the previous December 1 and May 31. Production reports show the folloeing sales:

 

 

June1, Year 1-November 30, Year 1                      300,000

 

December 1, Year 1-December 31, Year 1              50,000

 

December 1, Year 1-May 31, Year 2                      400,000

 

June 1, Year 2-November 30, Year2                     325,000

 

December 1, Year 2-December 31, Year 2             70,000

 

 

What amount should Rill report as royalty revenue for Year 2 ?

 

 

a  $ 149,000

 

b  $ 140,000

 

c  $ 159,000

 

d  $ 144,000



#2 bella.dreamer

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Posted 16 April 2014 - 09:48 PM

I believe it is 149,000.

400,000 - 50,000 = 350,000 + 325,000 + 70,000 = 745,000 *20% = 149,000.