Frank acquires a coal mine at a cost of 400,000. Intangible development costs total 100,000. After extraction has occurred, Frank must restore the property (estimated fair value of the obligation is 80,000), after which it can be sold for 160,000. Frank estimates that 4,000 tons of coal can be extracted. If 700 tons are extracted in the first year, prepare the journal entry to record depletion.

Frank acquires a coal mine at a cost of 400,000. Intangible development costs total 100,000. After extraction has occurred, Frank must restore the property (estimated fair value of the obligation is 80,000), after which it can be sold for 160,000. Frank estimates that 4,000 tons of coal can be extracted. If 700 tons are extracted in the first year, prepare the journal entry to record depletion.

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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