16 Problem 07-36 (Algo) [LO 7-10] points A&Z incurred $452,500 of capitalized costs to develop a uranium mine. The corporation's geologists estimated that the mine would produce 905,000 tons of ore. During the year, 181,000 tons were extracted and sold. A&Z's gross revenues from the sales totaled $579,200, and its operating expenses for the mine were $173,760. Required: Calculate A&Z's depletion deduction. 5 Mc Graw Hill > Answer is complete but not entirely correct. Depletion deduction $ 90,500 × < Prev 16 of 20 Next > Return to question

16 Problem 07-36 (Algo) [LO 7-10] points A&Z incurred $452,500 of capitalized costs to develop a uranium mine. The corporation's geologists estimated that the mine would produce 905,000 tons of ore. During the year, 181,000 tons were extracted and sold. A&Z's gross revenues from the sales totaled $579,200, and its operating expenses for the mine were $173,760. Required: Calculate A&Z's depletion deduction. 5 Mc Graw Hill > Answer is complete but not entirely correct. Depletion deduction $ 90,500 × < Prev 16 of 20 Next > Return to question

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 6PB: Underwoods Miners recently purchased the rights to a diamond mine. It is estimated that there are...

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9. XYZ Company quarries limestone, crushes it, and sells it to be used in road building. XYZ paid P10,000,000 for a certain quarry. The property can be sold for P3,000,000 after production ceases. Estimated reserves 10,000,000; Tons quarried through December 31, 20X4 4,000,000; Tons quarried in 20X5 1,500,000. An engineering study performed in 20X5 indicated that as of January 1, 20X5, 7,500,000 tons of limestones were available. 30. Assume that the materials and labor cost incurred during 20X5 is 2,160,000 and that 1,000,000 tons were sold during the year at P5.00, Gross Profit for the year is?
14. In January 20X1, ABC Mining Corporation purchased a mineral mine for P7,200,000 with removable ore estimated by geological surveys at 4,320,000 tons. The property has an estimated value of P720,000 after the ore has been extracted. ABC incurred P2,160,000 of development costs preparing the property for the extraction of ore. During 20X1, 540,000 tons were removed and 480,000 tons were sold. For the year ended December 31, 20X1, ABC should include what amount of depletion chargeable to ore inventory?
7 The Piney Copper Company purchased an ore- bearing tract of land for $10.0M. The geologist for Piney estimated the recoverable copper reserves to be 500,000 tons. During the first year, 50,000 tons were mined and 40,000 tons were sold for $5.0M. Expenses (not including depletion allowances) were $3.0M. (a) What are the percentage depletion and the cost depletion allowances?
10 A company's depletion base for a coal mine is $4,800,000, and this is recorded on the balance sheet in the coal mine asset account. The company expects to extract 120,000 tons of coal from the mine over the next 20 years. Which journal entry should the company record if it extracts 20,000 tons of coal during its first full year of operation? Debit cost of goods sold for $240,000; credit coal mine for $240,000 Debit coal mine for $800,000; credit inventory for $800,000 Debit inventory for $240,000; credit coal mine for $240,000 Debit inventory for $800,000; credit coal mine for $800,000
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A telecommunications company contracted for the installation of a fiber optic cable linking two major cities will cost of $960M. This amount includes freight and installation charges estimated at 10% of the above contract price. If the cable shall be depreciated over a period of 15 years with zero salvage value, what is the depreciation charge during the 8th year using the SOYD method? A. $41.28M B. $86M C. NOTA D. $64M
A&Z incurred $352,500 of capitalized costs to develop a uranium mine. The corporation's geologists estimated that the mine would produce 705,000 tons of ore. During the year, 141,000 tons were extracted and sold. A&Z's gross revenues from the sales totaled $451,200, and its operating expenses for the mine were $135,360. Required: Calculate A&Z's depletion deduction. Depletion deduction $ 70,500
7. Copper Mines, Inc (CMI) . purchased property for the purpose of extracting copper ore. CMl paid $3,500,000 for the property plus $100,000 closing costs. CMl estimates it will be able to extract 800,000 tons of copper ore from the property over the next 10 years. The actual number of tons of copper ore extracted during the next ten years are as follows: 95,000 tons each in years 1,2,3; 80,000 tons each of years 4,5,6&7; and 75,000 tons each of years 8,9,& 10. It is believed that after 10 years the extractable ore will have been removed and the land will be useful for cattle grazing with an estimated value of $200,000. What is the amount of expense related to the ore extraction to be recognized for year 8? a) b) c) d) e) 318,750 330,000 340,000 350,000 360,000
A&Z incurred $452,500 of capitalized costs to develop a uranium mine. The corporation’s geologists estimated that the mine would produce 905,000 tons of ore. During the year, 181,000 tons were extracted and sold. A&Z’s gross revenues from the sales totaled $579,200, and its operating expenses for the mine were $173,760. Required: Calculate A&Z’s depletion deduction.
Underwoods Miners recently purchased the rights to a diamond mine. It is estimated that there are two million tons of ore within the mine. Underwoods paid $46,000,000 for the rights and expects to harvest the ore over the next fifteen years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 900,000 tons Year 3: 400,000 tons Year 4: 210,000 tons Year 5: 150,000 tons Calculate the depletion expense for the next five years and create the journal entry for year one.