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(c) If Whispering plants five seedlings at a cost of $4 per seedling for each tree cut, how should Whispering treat the reforestation? Whispering should the cost of $

(c) If Whispering plants five seedlings at a cost of $4 per seedling for each tree cut, how should Whispering treat the reforestation? Whispering should the cost of $

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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**Whispering Company Timber Depletion and Depreciation Analysis** Whispering Company owns a 7,000-acre tract of timber purchased in 2006 at a cost of $1,417 per acre. At the time of purchase, the land value was estimated at $317 per acre without the timber. Since the purchase, the company has not logged the tract. In 2020, they conducted an appraisal which estimated each acre contained 8,720 board feet of timber. In the same year, they constructed 10 miles of roads at a cost of $8,400 per mile. After the roads were completed, Whispering logged and sold 3,815 trees containing 926,500 board feet. ### Financial Analysis **(a) Cost of Timber Sold Related to Depletion (2020)** - **Cost of Timber Sold:** $116,875 - **Note:** The answer was determined with two attempts (out of 15 allowed) and is confirmed to be correct. The cost calculation involves rounding to 0 decimal places. **(b) Depreciation Expense on Logging Roads (2020)** - **Depreciation Expense:** $1,275 - **Note:** The depreciation is based on the timber cut, with the final amount confirmed correct after four attempts, also rounded to 0 decimal places. Both calculations utilized textbook resources for assistance.
Transcribed Image Text:**Whispering Company Timber Depletion and Depreciation Analysis** Whispering Company owns a 7,000-acre tract of timber purchased in 2006 at a cost of $1,417 per acre. At the time of purchase, the land value was estimated at $317 per acre without the timber. Since the purchase, the company has not logged the tract. In 2020, they conducted an appraisal which estimated each acre contained 8,720 board feet of timber. In the same year, they constructed 10 miles of roads at a cost of $8,400 per mile. After the roads were completed, Whispering logged and sold 3,815 trees containing 926,500 board feet. ### Financial Analysis **(a) Cost of Timber Sold Related to Depletion (2020)** - **Cost of Timber Sold:** $116,875 - **Note:** The answer was determined with two attempts (out of 15 allowed) and is confirmed to be correct. The cost calculation involves rounding to 0 decimal places. **(b) Depreciation Expense on Logging Roads (2020)** - **Depreciation Expense:** $1,275 - **Note:** The depreciation is based on the timber cut, with the final amount confirmed correct after four attempts, also rounded to 0 decimal places. Both calculations utilized textbook resources for assistance.
### Reforestation Cost Management **Scenario:** If Whispering plants five seedlings at a cost of $4 per seedling for each tree cut, how should Whispering treat the reforestation? **Solution:** 1. Calculate the total cost of planting seedlings. 2. Use the given input fields to determine how Whispering should manage these costs. - **Dropdown Option:** Whispering should [select from dropdown] - **Input Field:** the cost of $[input amount]. This exercise helps in understanding the cost management related to environmental conservation efforts such as reforestation.
Transcribed Image Text:### Reforestation Cost Management **Scenario:** If Whispering plants five seedlings at a cost of $4 per seedling for each tree cut, how should Whispering treat the reforestation? **Solution:** 1. Calculate the total cost of planting seedlings. 2. Use the given input fields to determine how Whispering should manage these costs. - **Dropdown Option:** Whispering should [select from dropdown] - **Input Field:** the cost of $[input amount]. This exercise helps in understanding the cost management related to environmental conservation efforts such as reforestation.
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