**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.

Generally, organizations use assets and apply depreciation to the asset. However, the majority of the organization's business is related to the use or extraction of natural resources such as oil, timber, and coal, and this type of organization applies the concept of depletion to natural resource use. The capitalized cost of the planted tree can be computed as follows:c) Explanation-The calculation of the cost is as follows-The capitalized cost is $76,300Note- point a, and b is showing correct so here solved point cFinal answerCompany W Should Capitalize the cost of $76,300.

Answered: (c) If Whispering plants five seedlings…

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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 $

Intermediate Accounting: Reporting And Analysis

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ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

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Question

**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.

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