At the beginning of 2017, Carla Vista Company acquired a mine for $ 891,000. Of this amount, $ 90,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 5,400,000 tons of the ore appear to be in the mine. Carla Vista incurred $ 45,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $ 18,000. During 2017, 1,080,000 units of ore were extracted and 900,000 of these units were sold. Compute the following.

At the beginning of 2017, Carla Vista Company acquired a mine for $ 891,000. Of this amount, $ 90,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 5,400,000 tons of the ore appear to be in the mine. Carla Vista incurred $ 45,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $ 18,000. During 2017, 1,080,000 units of ore were extracted and 900,000 of these units were sold. Compute the following.

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Description: At the beginning of 2017, Carla Vista Company acquired a mine for $ 891,000. Of this amount, $ 90,000 was ascribed to the land valueand the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximat

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Chapter10: Valuing Early-stage Ventures

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Concept explainers

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.

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At the beginning of 2017, Carla Vista Company acquired a mine for $ 891,000. Of this amount, $ 90,000 was ascribed to the land value
and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 5,400,000
tons of the ore appear to be in the mine. Carla Vista incurred $ 45,000 of development costs associated with this mine prior to any
extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the
mineral has been removed was $ 18,000. During 2017, 1,080,000 units of ore were extracted and 900,000 of these units were sold.
Compute the following.

The amount that is charged as an expense for 2017 for the cost of the minerals sold during 2017.(Round per unit answer to 2
decimal places, e.g. 0.45 for computational purpose and final answer to O decimal places, e.g. 45,892.)
Amount that is charged as an expense for 2017
%24

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