Oil & Gas
Farm-Out Transaction — Partial Interest Sold
The company sells a 30% working interest in a license to a third party in exchange for a carried interest.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash (Farm-In Payment) | Asset (+) | 20,000,000.00 | - |
| E&E / Development Assets (30% Share) | Asset (-) | - | 15,000,000.00 |
| Gain on Farm-Out | Revenue (+) | - | 5,000,000.00 |
💡 Accountant's Note
A farm-out partially divests a license interest. The gain is the consideration received less the book value of the portion of asset disposed. Farm-outs are a key risk management and capital recycling tool in exploration.
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