At the beginning of 2018, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000.After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operationswere constructed and completed on March 30, 2018. The cost of the roads, which have no residual value and noalternative use after the tract is cleared, was $240,000. During 2018, Terra logged 500,000 of the estimated fivemillion board feet of timber.Required:Calculate the 2018 depletion of the timber tract and depreciation of the logging roads assuming the units-of-production method is used for both assets.
At the beginning of 2018, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000.After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operationswere constructed and completed on March 30, 2018. The cost of the roads, which have no residual value and noalternative use after the tract is cleared, was $240,000. During 2018, Terra logged 500,000 of the estimated fivemillion board feet of timber.Required:Calculate the 2018 depletion of the timber tract and depreciation of the logging roads assuming the units-of-production method is used for both assets.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
At the beginning of 2018, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000.
After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operations
were constructed and completed on March 30, 2018. The cost of the roads, which have no residual value and no
alternative use after the tract is cleared, was $240,000. During 2018, Terra logged 500,000 of the estimated five
million board feet of timber.
Required:
Calculate the 2018 depletion of the timber tract and
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education