A. Mining Company purchased land on January1, 2015, at a cost of $2,200,000. It estimated that a total of 90,000 tons of mineral was available for mining. After it has detached all the mineral resources, the company will be required to reinstate. the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $110,000. It believes it will be able to sell the property afterwards for $150,000. It incurred developmental costs of $300,000 before it was able to do any mining. In 20105 resources removed totaled 35,000 tons. The company sold 30,000 Ions. Instructions Compute the following information for 2015. Per unit mineral cost. Total material cost of December 31, 2015, inventory. Total materials cost in cost of goods sold at December 31, 2015.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
Q2) A. Mining Company purchased land on January1, 2015, at a cost of $2,200,000. It estimated that a total of 90,000 tons of mineral was available for mining. After it has detached all the mineral resources, the company will be required to reinstate. the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $110,000. It believes it will be able to sell the property afterwards for $150,000. It incurred developmental costs of $300,000 before it was able to do any mining. In 20105 resources removed totaled 35,000 tons. The company sold 30,000 Ions.
Instructions
Compute the following information for 2015.
- Per unit mineral cost.
- Total material cost of December 31, 2015, inventory.
- Total materials cost in cost of goods sold at December 31, 2015.
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