Lakeland Mountain Mining paid $627,300 for the right to extract mineral assets from a 550,000-ton deposit. In addition to the purchase price, Lakeland also paid a $800 filing fee, a $1,900 license fee to the state of Nevada, and $85,000 for a geological survey of the property. Because Lakeland purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year, Lakeland removed and sold 60,000 tons of the minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing (a) the purchase of the minerals (debit Mineral asset). (Do not record payment for any additional costs associated with the minerals. We will do this in entry b.) Date Accounts and Explanation a. Debit Credit

Lakeland Mountain Mining paid $627,300 for the right to extract mineral assets from a 550,000-ton deposit. In addition to the purchase price, Lakeland also paid a $800 filing fee, a $1,900 license fee to the state of Nevada, and $85,000 for a geological survey of the property. Because Lakeland purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year, Lakeland removed and sold 60,000 tons of the minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing (a) the purchase of the minerals (debit Mineral asset). (Do not record payment for any additional costs associated with the minerals. We will do this in entry b.) Date Accounts and Explanation a. Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: [The following information applies to the questions displayed below] On January 1, Mitzu Company…

A: Financial journal entries that guarantee an organization allocates its revenue and spending…

Q: Sierra Mountain Mining paid $607,000 for the right to extract mineral assets from a 350,000-ton…

A: Cost related to the assets purchased , which has been incurred before the asset put in use will be…

Q: The Jackson Mining Company paid $1,000,000 for the right to explore for a coal deposit on 500 acres…

A: Purchase cost = 1,000,000Exploration cost = 800,000Intangible development cost = 500,000

Q: On April 1, 2025, Skysong Company received a condemnation award of $481,600 cash as compensation for…

A: Journal Entry is the primary step in recording the transactions in the books of accounts.The…

Q: Smith Corporation has a building which is being reclassifed from PPE to an investment. The building…

Q: Southern Company owns a building that it leases to others. The building’s fair value is $1,400,000…

A: journal entries to record the exchange on the books of Company S.

Q: On July 1, 2017, Sandhill Company received $1,012,000 cash as compensation for the forced sale…

A: Introduction: Journal: Recording of a business transactions in a chronological order. First step in…

Q: At the beginning of 2020, Monty Company acquired a mine for $2,507,200. Of this amount, $119,000 was…

A: Depletion is used to allocate the costs of extraction of natural resources. These resources include…

Q: Hand Creamy Limited purchased a land for $150,000 cash on 1 September 2016 and a machine for…

A: a) Depreciation: Machinery = Cost/ life = $300,000/10 years =…

Q: On July 1, 2017, Carla Vista Company received $990,000 cash as compensation for the forced sale…

A: JOURNAL ENTRY IS AN ART OF RECORDING BUSINESS TRANSACTION EITHER ECONOMIC OR NON ECONOMIC . 1.…

Q: Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and development costs…

A: An asset retirement obligation is a legal obligation that is created when a long-lived asset is…

Q: Jonson Corporation incurred $150,000 in capitalized acquisition costs to develop an oil well. The…

A: Depreciation is referred to a method of expensing the cost of a capital asset over its useful life.…

Q: Larkspur Mining Company purchased land on February 1, 2025, at a cost of $1,031,100. It estimated…

A: Cost of depletion refers to those costs that are incurred in the process of extracting various…

Q: At the beginning of 2017, Oriole Company acquired a mine for $1,466,200. Of this amount, $104,000…

A: Depletion is charged to record the reduction in value of natural resource over the period of time.…

Q: Tiger Mfg. owns a manufacturing facility that is currently sitting idle. The facility is located on…

A: The objective of the question is to determine the cost that should be included in the project…

Q: On Jan 1, 20X1 ABC Mining Co. purchased a mine for P2,640,000 with removable ore estimated at…

A: Depletion is the reduction in the value of natural resources due to extraction. In accounting, this…

Q: Sunset Mountain Mining paid $362,300 for the right to extract mineral assets from a 350,000-ton…

A: Step 1 Journal is the part of the book keeping.

Q: 1 January 2018, Sharp Limited (Sharp) applied for a government grant of $20 million to finance the…

A: (a) With reference to HKAS 20, Sharp should recognize the government grant on 1 July 2018, when the…

Q: At the beginning of 2017, Cullumber Company acquired a mine for $2,379,400. Of this amount, $122,000…

A: Depletion: It refers to the process of proportionately distributing the cost of the extracting…

Q: Your client, Hazelton Mining, recently entered into an agreement to obtain the rights to operate a…

A: Disclaimer: Since it is a multipart question, we are able to give answers to the first 3 parts. If…

Q: At the beginning of 2017, Carla Vista Company acquired a mine for $ 891,000. Of this amount, $…

A: Cost of mine = Total purchase price - Land value + Development costs + restoration costs =…

Q: Required: a. Discuss whether the company's policy for the treatment of government grants meets the…

A: a. Discussion on the Company's Policy for Treatment of Government Grants:According to the IASB's…

Question

Lakeland Mountain Mining paid $627,300 for the right to extract mineral assets from a 550,000-ton deposit. In addition
to the purchase price, Lakeland also paid a $800 filing fee, a $1,900 license fee to the state of Nevada, and $85,000
for a geological survey of the property. Because Lakeland purchased the rights to the minerals only and did not
purchase the land, it expects the asset to have zero residual value. During the first year, Lakeland removed and sold
60,000 tons of the minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment
of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on
the last line of the journal entry table.)
Begin by journalizing (a) the purchase of the minerals (debit Mineral asset). (Do not record payment for any additional
costs associated with the minerals. We will do this in entry b.)
Date
Accounts and Explanation
a.
Debit
Credit

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Journal entries

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

Tree Lovers Inc. purchased 100 acres of woodland in which the company intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $3,000,000 for the land. Tree Lovers will sell the lumber as it is harvested and expects to deplete it over five years (23 acres in year one, 30 acres in year two, 24 acres in year three, 10 acres in year four, and 13 acres in year five). Calculate the depletion expense for the next five years. Year 1 $ Year 2 Year 3 $ Year 4 Year 5 Prepare the journal entry for year one. If an amount box does not require an entry, leave it blank. %24 %24 %24 %24 %24
Information Processing, Inc. (IPI) exchanges its used machine for a new machine with Jerrod Business Solutions Inc. The exchange has commercial substance. IPI’s used machine has a book value of $8,000 (original cost $12,000 less $4,000 accumulated depreciation) and a fair value of $6,000. The new machine has a fair value of $16,000. IPI also pays Jerrod Business Solutions $7,000 cash in the transaction. Accounting Issue(s): What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions? Question 1: What is the correct amount that IPI should record for the machine it acquired in the exchange with Jerrod Business Solutions? $6,000 $7,000 $8,000 $13,000 $15,000 $16,000
Crane Corporation acquires a coal mine at a cost of $404,000. Intangible development costs total $101,000. After extraction has occurred, Crane must restore the property (estimated fair value of the obligation is $80,800), after which it can be sold for $161,600. Crane estimates that 4,040 tons of coal can be extracted.If 707 tons are extracted the first year, prepare the journal entry to record depletion. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
Barton Corporation acquires a coal mine at a cost of $1,800,000. Intangible development costs total $360,000. After extraction has occurred, Barton must restore the property (estimated fair value of the obligation is $180,000), after which it can be sold for $210,000. Barton estimates that 5,000 tons of coal can be extracted. What is the amount of depletion per ton? a. $426 b. $384 c. $468 d. $360
Corning Industries owns a patent for which it paid $77,000. At the end of the current year, accumulated amortization on the patent totaled $14,000. Due to adverse economic conditions, Corning’s management determined that it should assess whether an impairment loss should be recognized for the patent. The estimated undiscounted future cash flows to be provided by the patent total $45,000, and the patent's fair value is $30,000. (a) What is the amount of the impairment loss, if any, on the patent at the end of the current year? (b) What is the book value of the patent after any impairment loss is recorded?
B3.
Dinesh
During its inception, Devon Company purchased land for $250,000 and a building for $200,000. After exactly 3 years, it transferred these assets and cash of $50,000 to a newly created subsidiary, Regan Company, in exchange for 20,000 shares of Regan's $10 par value stock. Devon uses straight-line depreciation. Useful life for the building is 20 years, with zero residual value. An appraisal revealed that the building has a fair value of $250,000. What will Devon record as Additional Paid in Capital as a result of this transaction? Group of answer choices additional paid-in capital of $0. additional paid-in capital of $270,000. additional paid-in capital of $350,000. additional paid-in capital of $300,000.
Tamarisk Mining Company purchased land on February 1, 2020, at a cost of $ 914,300. It estimated that a total of 53,400 tons of mineral was available for mining. After it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. It estimates the fair value of this restoration obligation at $ 98,100. It believes it will be able to sell the property afterwards for $ 109,000. It incurred developmental costs of $ 218,000 before it was able to do any mining. In 2020, resources removed totaled 26,700 tons. The company sold 19,580 tons. Compute the following information for 2020. a) Per unit mineral cost $ (b) Total material cost of December 31, 2020, inventory $ (c) Total material cost in cost of goods sold at December 31, 2020 $