Depletion On January 2, 2019, Whistler Company purchased land for $500,000, from which it is estimated that 400,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $59,000, after which it could be sold for $30,000. During 2019, Whistler mined 78,000 tons and sold 64,000 tons. During 2020, Whistler mined 106,000 tons and sold 96,000 tons. At the beginning of 2021, Whistler spent an additional $90,000, which increased the reserves by 63,000 tons. In 2021, Whistler mined 138,000 tons and sold 140,000 tons. Whistler uses a FIFO cost flow assumption. Required: If required, round the depletion rate to the nearest cent and round the final answers to the nearest dollar. 1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021.
Depletion On January 2, 2019, Whistler Company purchased land for $500,000, from which it is estimated that 400,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $59,000, after which it could be sold for $30,000. During 2019, Whistler mined 78,000 tons and sold 64,000 tons. During 2020, Whistler mined 106,000 tons and sold 96,000 tons. At the beginning of 2021, Whistler spent an additional $90,000, which increased the reserves by 63,000 tons. In 2021, Whistler mined 138,000 tons and sold 140,000 tons. Whistler uses a FIFO cost flow assumption. Required: If required, round the depletion rate to the nearest cent and round the final answers to the nearest dollar. 1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Depletion
On January 2, 2019, Whistler Company purchased land for $500,000, from which it is estimated that 400,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $59,000, after which it could be sold for $30,000.
During 2019, Whistler mined 78,000 tons and sold 64,000 tons. During 2020, Whistler mined 106,000 tons and sold 96,000 tons. At the beginning of 2021, Whistler spent an additional $90,000, which increased the reserves by 63,000 tons. In 2021, Whistler mined 138,000 tons and sold 140,000 tons. Whistler uses a FIFO cost flow assumption.
Required:
If required, round the depletion rate to the nearest cent and round the final answers to the nearest dollar.
1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021.
| 2019 | Depletion deducted from income | $fill in the blank ed708e053f9005b_1 | |
| Depletion included in inventory | $fill in the blank ed708e053f9005b_2 | ||
| 2020 | Depletion deducted from income | $fill in the blank ed708e053f9005b_3 | |
| Depletion included in inventory | $fill in the blank ed708e053f9005b_4 | ||
| 2021 | Depletion deducted from income | $fill in the blank ed708e053f9005b_5 | |
| Depletion included in inventory | $fill in the blank ed708e053f9005b_6 |
2. Complete the natural resources section of the balance sheet on December 31, 2019, 2020, and 2021, assuming that an accumulated depletion account is used.
| Whistler Company | ||
| Balance Sheet (partial) | ||
| December 31, 2019 - 2021 | ||
| December 31, 2019 | ||
| Mineral ore resources | $fill in the blank 0e835602701403c_1 | |
| Less: Accumulated depletion | fill in the blank 0e835602701403c_2 | |
| $fill in the blank 0e835602701403c_3 | ||
| December 31, 2020 | ||
| Mineral ore resources | $fill in the blank 0e835602701403c_4 | |
| Less: Accumulated depletion | fill in the blank 0e835602701403c_5 | |
| $fill in the blank 0e835602701403c_6 | ||
| December 31, 2021 | ||
| Mineral ore resources | $fill in the blank 0e835602701403c_7 | |
| Less: Accumulated depletion | fill in the blank 0e835602701403c_8 | |
| $fill in the blank 0e835602701403c_9 |
3. Assume Whistler's discount rate was 10%. What is the balance in the asset retirement obligation at 2019, 2020, and 2021?
| Whistler Company | |
| Asset retirement obligation | |
| 2019 - 2021 | |
| December 31, 2019 | $fill in the blank b0841d021fa202d_1 |
| December 31, 2020 | $fill in the blank b0841d021fa202d_2 |
| December 31, 2021 | $fill in the blank b0841d021fa202d_3 |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps
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