Colorado Mining paid $614,400 to acquire a mine with 820,000 tons of coal reserves. The horizontal statements model reflects Colorado Mining's financial condition just prior to purchasing the coal reserves. The company extracted 430,500 tons of coal in Year 1 and 369,000 tons in Year 2. Required a. Compute the depletion charge per unit. b. Record the acquisition of the coal reserves and the depletion expense for years 1 and 2 in a financial statements model like the preceding one. c. Prepare the general journal entries to record the depletion expense for years 1 and 2.

Colorado Mining paid $614,400 to acquire a mine with 820,000 tons of coal reserves. The horizontal statements model reflects Colorado Mining's financial condition just prior to purchasing the coal reserves. The company extracted 430,500 tons of coal in Year 1 and 369,000 tons in Year 2. Required a. Compute the depletion charge per unit. b. Record the acquisition of the coal reserves and the depletion expense for years 1 and 2 in a financial statements model like the preceding one. c. Prepare the general journal entries to record the depletion expense for years 1 and 2.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

The following information relating to an investment in equipment has been extracted from the books of LRB Ltd: The total purchase price is $78,560. Net sales revenue (relating to the equipment): Year-1 $38,000; Year-2 $29,000; Year-3 $24,000; and Year-4 $20,000. The required rate of return is 12%. The expected salvage value is $14,266 at the end of year 4. The depreciation rate is 18% straight line. If the applicable tax rate is 32%, calculate the tax amount in the fourth year relating to the sale of the equipment only. Use excel spreadsheet to Answer.
Subject:
On April 1, Year 1, Fossil Energy Company purchased an oil producing well at a cash cost of $10,620,000. It is estimated that the oil well contains 820,000 barrels of oil, of which only 720,000 can be profitably extracted. By December 31, Year 1, 36,000 barrels of oil were produced and sold. What is depletion expense for Year 1 on this well? (Do not round intermediate calculations.):
Need Help please
Colorado Mining paid $686,000 to acquire a mine with 49,000 tons of coal reserves. The financial statements model shown on the last tab reflects Colorado Mining’s financial condition just prior to purchasing the coal reserves. The company extracted 25,725 tons of coal in year 1 and 22,050 tons in year 2. Required Compute the depletion charge per unit. b-1. Compute the depletion expense for years 1 and 2 in financial statements. b-2. Record the acquisition of the coal reserves and the depletion expense for years 1 and 2 in a financial statements model.
Data related to the acquisition of timber rights and intangible assets during the current year ended December 31 are as follows: A. Timber rights on a tract of land were purchased for $3,461,120 on February 22. The stand of timber is estimated at 5,408,000 board feet. During the current year, 1,028,300 board feet of timber were cut and sold. B. On December 31, the company determined that $3,640,000 of goodwill was impaired. C. Governmental and legal costs of $6,108,000 were incurred on April 3 in obtaining a patent with an estimated economic life of 10 years. Amortization is to be for three-fourths of a year. Required: 1. Determine the amount of the amortization, depletion, or impairment for the current year for each of the foregoing items. 2. Journalize the adjusting entries required to record the amortization, depletion, or impairment for each item. Refer to the Chart of Accounts for exact wording of account titles. CHART OF ACCOUNTSGeneral Ledger ASSETS…
Hidden Hollow Mining Co. acquired mineral rights for $69,000,000. The mineral deposit is estimated at 60,000,000 tons. During the current year, 13,200,000 tons were mined and sold. a. Determine the depletion rate. If required, round your answer to two decimal places. Sfill in the blank d39a0a00ffc1f93_1 per ton
Calculate the amortization and depletion for each transaction. A gold garment production company acquired the rights to a mine for $520,000,000. In the mine, it is estimated that there are 150,000,000 tons of gold. A quantity of 50,000,000 tons was sold in the year.Calculate the depletion rate and the depletion expense for the year.You must provide the steps of how you arrived at the result.
An asset for drilling was purchased and placed in service by a petroleum production company. Its cost basis is $60,000 and it has an estimated MV of $12,000 at the end of an estimated useful life of 14 years. Compute the accumulated depreciation in the third year and the BV at the end of 5th year of life by each of these methods at the rate of 9%: b. The DB Method (Declining Balance Method)- Provide the complete manual solution (not excel or tables) and cash flow diagram
Calculating Depletion, Depreciation, and Ending Inventory Aerial Company acquired land containing natural resources on January 1 that it planned to extract for $6 million. The amount allocated to the land is $220,000. Surveys estimate that the recoverable resources will total 4 million tons. The company paid an additional $440,000 for development of the mining land to prepare for the extraction of the resources. The company also incurred $220,000 to install mining equipment with a useful life of 8 years. The equipment will not be used for other projects. The company is obligated to restore the site after the extraction of resources. The present value of this obligation is $55,000. The company extracted 528,000 tons of natural resources during the year and 495,000 tons were sold during the year. Required a. Determine depletion for the natural resource during the year. Hint: Equipment cost is accounted for separately and its depreciation is recorded as Depreciation Expense. Numerator /…
Dow Deep Mining Co acquired mineral rights for $56,000,000. The mineral deposit is estimated at 70,000,000 tons. During the current year, 18,200,000 tons were mined an a. Determine the depletion rate. It required, round your answer to two decina aces A) Depletion rate per ton.
Accounting for natural resources Donahue Oil Incorporated has an account titled Oil and Gas Properties. Donahue paid $6,400,000 for oil reserves holding an estimated 400,000 barrels of oil. Assume the company paid $510,000 for additional geological tests of the property and $470.000 to prepare for drilling. During the first year, Donahue removed and sold 75.000 barrels of oil. Record all of Donahue’s transactions, including depletion for the first year.