and sold immediately. Required: Calculate depletion for 2024. Is depletion considered part of the product cost and included in the cost of inventory?
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A: Step 1: Calculation of depletion expense.Cost ($4,200,000+$1,176,000)$5,376,000Salvage…
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A: 1. Compute depletion expense for 2003: Working note: Compute depletion cost per unit:
Q: Perez Company acquires an ore mine at a cost of $1,680,000. It incurs additional costs of $470,400…
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Q: The total amount of depletion that Valley should record for 2021 is?
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Q: Required information [The following information applies to the questions displayed below] On January…
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Q: Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and development costs…
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Q: In January year 1, the Under Mine Corporation purchased a mineral mine for $3,400,000 with removable…
A: Solution:Cost of mineral mine = Purchase price + Development costDepletion cost per unit = (Cost of…
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A: Depletion expense = (Cost - Salvage value) * coal extracted / Total coal estimated to be available =…
Q: On January 2, 2020, the Wally Company purchased land for P 450,000, from which it is estimated that…
A: Depletion is the reduction in value of something due to regular usage.
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A: When the asset is obtained for a period of time, for the purpose of usage and the asset is to be…
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Q: In January, 2023, Demba Corporation purchased a mineral mine for $3,400,000 with removable ore…
A: Natural resources deplete you over time in the same way that material goods do due to wear and tear.…
Q: In January, 2004, Nixon Corporation purchased a mineral mine for P6,800,000 with removable ore…
A: Depletion Expense: Depletion expense is determined to record the exhaustion of natural resources. It…
Q: On January 2, 2019, Whistler Company purchased land for $530,000, from which it is estimated that…
A: Depletion expense allows an owner or the extractor to charge the cost of reserves on the basis of…
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Q: Manji
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A: Requirement 1: Unit Depletion rate per ton = ($500,000 + $ 59,000) - $30,000 ÷ 400,000 tons =…
Q: LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million…
A: Cost of land = P120,000,000 Expected minerals to be extracted = 5,000,000 Salvage value = P6,000,000…
Q: On January 2, 2019, Whistler Company purchased land for $490,000, from which it is estimated that…
A: 2019 unit depletion rate = [490,000 + 55,000 - 33,000 ] / 420,000 = 1.22 per ton 2021 unit depletion…
Q: On April 17, 2016, the Loadstone Mining Company purchased the rights to a coal mine. The purchase…
A: 1.Compute depletion expense for the year 2016.
Q: Perez Company acquires an ore mine at a cost of $2,380,000. It incurs additional costs of $666,400…
A: Depletion is just like depreciation but it is charged on natural resources such as mines etc. It is…
Q: Grey Mining Company has purchased a tract of mineral land for $1,200,000. It is estimated that this…
A: Depletion base=Value of land-Residual value=$1,200,000-$80,000=$1,120,000
On April 17, 2024, the Loadstone Mining Company purchased the rights to a copper mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the copper totaled $5,200,000. The company expects to extract 1,040,000 tons of copper during a four-year period. During 2024, 254,000 tons were extracted and sold immediately.
Required:
- Calculate depletion for 2024.
- Is depletion considered part of the product cost and included in the cost of inventory?
Step by step
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- MINA MINING CO. has acquired a tract of mineral land for P50,000,000. Mina Mining estimates that the acquired property will yield 150,000 tons of ore with sufficient mineral content to make mining and processing profitable. It further estimates that 7,500 tons of ore will be mined the first and last year and 15,000 tons every year in between. (Assume 11 years of mining operations.) The land will have a residual value of P1,550,000. Mina Mining builds necessary structures and sheds on the site at a total cost of P12,000,000. The company estimates that these structures can be used for 15 years but, because they must be dismantled if they are to be moved, they have no residual value. Mina Mining does not intend to use the buildings elsewhere. Mining machinery installed at the mine was purchased secondhand at a total cost of P3,600,000. The machinery cost the former owner P9,000,000 and was 50% depreciated when purchased. Mina Mining estimates that about half of this machinery will still…In 2021, the Marion Company purchased land containing a mineral mine for $1,740,000. Additional costs of $676,000 were incurred to develop the mine. Geologists estimated that 400,000 tons of ore would be extracted. After the ore is removed, the land will have a resale value of $116,000. To aid in the extraction, Marion built various structures and small storage buildings on the site at a cost of $184,000. These structures have a useful life of 10 years. The structures cannot be moved after the ore has been removed and will be left at the site. In addition, new equipment costing $96,000 was purchased and installed at the site. Marion does not plan to move the equipment to another site, but estimates that it can be sold at auction for $4,000 after the mining project is completed. In 2021, 60,000 tons of ore were extracted and sold. In 2022, the estimate of total tons of ore in the mine was revised from 400,000 to 451,000. During 2022, 96,000 tons were extracted. Required: 1. Compute…Show the solution in good accounting form
- Depletion Expense Prepare the entry to record the cost of the ore mine and year-end adjusting entry. General Journal View transaction list Journal entry worksheet < A B Record the cost of the ore mine in cash. Transaction 1 Note: Enter debits before credits. General Journal Debit Credit7. 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) 318,750 330,000 340,000 350,000 360,000Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, anddevelopment costs totaled $7.3 million. Extraction activities began on July 1, 2024. After thecopper is extracted in approximately six years, Schefter is obligated to restore the land to itsoriginal condition, including constructing a park. The company’s controller has provided thefollowing three cash flow possibilities for the restoration costs:Cash Flow Probability1. $ 610,000 25%2. 710,000 25%3. 810,000 50%The company’s credit-adjusted, risk-free rate of interest is 6%, and its fiscal year ends onDecember 31.Note: Use appropriate factor(s) from the tables provided. Round other intermediatecalculations to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of $1,FVAD of $1 and PVAD of $1)Required:1. What is the initial cost of the copper mine?2. How much accretion expense will Schefter report in its 2024 income statement?3. What is the book value of the asset retirement obligation that Schefter…
- In January, 2020, Swifty Corporation purchased a mineral mine for $4800000 with removable ore estimated by geological surveys at 2500000 tons. The property has an estimated value of $310000 after the ore has been extracted. The company incurred $1600000 of development costs preparing the mine for production. During 2020, 600000 tons were removed and 450000 tons were sold. What is the amount of depletion that Swifty should expense for 2020?The Platinum Touch Mining Company paid $4,000,000 for a parcel of land, including the mining rights. In addition, the company spent $564,700 to prepare the site for mining operations. When mining is completed, it is estimated that the residual value of the asset will be $800,000. Scientists estimate that the site contains 150,000 ounces of platinum. A. What is the average depletion cost per ounce? B. If 12,200 ounces were mined in the first year of operation, what is the amount of the depletion cost?In January, 2004, Nixon Corporation purchased a mineral mine for P6,800,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of P400,000 after the ore has been extracted. The company incurred P2,000,000 of development costs preparing the mine for production. During 2004, 500,000 tons were removed and 400,000 tons were sold. What is the amount of depletion that Nixon should expense for 2004? P1,280,000 OP2,240,000 P1,680,000 OP1,600,000
- On January 1,2015, GOGO Company purchased land with valuable natural ore deposits for $20,000,000. At that time, the estimated recoverable output from the mine is $4,000,000 metric tons of ore after which the land is expected to have residual value of $3,000,000. To facilitate the extraction and transportation of the ore, roads were constructed amounting to $1,500,000. In 2015, 2,000,000 metric tons were mined. At the end of 2016, a new estimate of remaining recoverable ore indicated 2,500,000 metric tons are available. During 2016, 1,500,000 metric tons were mined. How much is the depletion expense for the year 2016?A coal mine contains approximately 900,000 tons of this material. The mine cost $13' 500, 000 million. The extraction during 2021, the first year of operations, was 120,000 tons. a) How much is the depletion in 2021? b) Suppose that in 2022 100,000 tons were extracted, what would be the net book value? c) Make the table of the depreciation calculation by the method that corresponds and is adequate to solve this exercise. Could you explain step by step and in detail?, pleaseIn 2021, the Marion Company purchased land containing a mineral mine for $1,800,000. Additional costs of $920,000 were incurred to develop the mine. Geologists estimated that 400,000 tons of ore would be extracted. After the ore is removed, the land will have a resale value of $120,000. To aid in the extraction, Marion built various structures and small storage buildings on the site at a cost of $208,000. These structures have a useful life of 10 years. The structures cannot be moved after the ore has been removed and will be left at the site. In addition, new equipment costing $109,000 was purchased and installed at the site. Marion does not plan to move the equipment to another site, but estimates that it can be sold at auction for $5,000 after the mining project is completed. In 2021, 70,000 tons of ore were extracted and sold. In 2022, the estimate of total tons of ore in the mine was revised from 400,000 to 499,000. During 2022, 109,000 tons were extracted. Required: 1. Compute…
