13. ABC Company purchased a tract of resource land in 20X0 for 39,600,000. The content of the tract was estimated at 1,200,000 units. When the resource has been exhausted, it is estimated that the land will be worth 1,200,000. Fixed installations were set up at a cost of 9,600,000. Mining equipment was purchased on January 1, 20X1 for 12,400,000. The life of the fixed installations is 8 years and the equipment, 4 years. In 20X1,120,000 units have been extracted. This was one-half of the annual
13. ABC Company purchased a tract of resource land in 20X0 for 39,600,000. The content of the tract was estimated at 1,200,000 units. When the resource has been exhausted, it is estimated that the land will be worth 1,200,000. Fixed installations were set up at a cost of 9,600,000. Mining equipment was purchased on January 1, 20X1 for 12,400,000. The life of the fixed installations is 8 years and the equipment, 4 years. In 20X1,120,000 units have been extracted. This was one-half of the annual
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter18: Accounting For Long-term Assets
Section: Chapter Questions
Problem 6CE
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13. ABC Company purchased a tract of resource land in 20X0 for 39,600,000. The content of the tract was estimated at 1,200,000 units. When the resource has been exhausted, it is estimated that the land will be worth 1,200,000. Fixed installations were set up at a cost of 9,600,000. Mining equipment was purchased on January 1, 20X1 for 12,400,000. The life of the fixed installations is 8 years and the equipment, 4 years. In 20X1,120,000 units have been extracted. This was one-half of the annual extraction, which can be expected following the first year of operations. ABC Company should record depletion for 20X1 at
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