Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. SExercise 11-18 (Algo) Cost of a natural resource; depletion and depreciation; Chapters 10 and 11 [LO11-2,11-3]Jackpot Mining Company operates a copper mine in central Montana. The company paid $1,550,000 in2024 for the mining site and spent an additional $710,000 to prepare the mine for extraction of the copper.After the copper is extracted in approximately four years, the company is required to restore the land to itsoriginal condition, including repaving of roads and replacing a greenbelt. The company has provided thefollowing three cash flow possibilities for the restoration costs:Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 andPVAD of $1)123CashOutflow$ 410,000510,000710,000Probability25%40%35%To aid extraction, Jackpot purchased some new equipment on July 1, 2024, for $249,000. After the copperis removed from this mine, the equipment will be sold for an estimated residual amount of $27,000. Therewill be no residual value for the copper mine. The credit-adjusted risk-free rate of interest is 10%.The company expects to extract 11.1 million pounds of copper from the mine. Actual production was 2.7million pounds in 2024 and 4.1 million pounds in 2025.Required:1. Compute depletion and depreciation on the mine and mining equipment for 2024 and 2025. The units-of-production method is used to calculate depreciation.Note: The expected format for rounding is presented in the appropriate rows of the table. Round yourfinal answers to nearest whole dollar.Restoration costs:Cash outflowProbabilityACAProbableRestorationCost

PossibilityCash outflow(A)Probability(B)Amount(A x…

las in 2025. Required: 1. Compute depletion and depreciation on the mine and mining equipment for 2024 and 2025. The units- of-production method is used to calculate depreciation. Note: The expected format for rounding is presented in the appropriate rows of the table. Round your final answers to nearest whole dollar.

las in 2025. Required: 1. Compute depletion and depreciation on the mine and mining equipment for 2024 and 2025. The units- of-production method is used to calculate depreciation. Note: The expected format for rounding is presented in the appropriate rows of the table. Round your final answers to nearest whole dollar.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter7: Operating Assets

Section: Chapter Questions

Problem 38BE

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Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one million tons of ore within the mine. Gimli paid $23,100,000 for the rights and expects to harvest the ore over the next ten years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 90,000 tons Year 3: 100,000 tons Year 4: 110,000 tons Year 5: 130,000 tons Calculate the depletion expense for the next five years, and create the journal entry for year one.
Exercise 9.11 (Algo) Depletion of Natural Resources (LO9-7) Salter Mining Company purchased the Northern Tier Mine for $88 million cash. The mine was estimated to contain 1.45 million tons of ore and to have a residual value of $1.4 million. During the first year of mining operations at the Northern Tier Mine, 95,000 tons of ore were mined, of which 18,000 tons were sold. a. Prepare a journal entry to record depletion during the year. b. Show how the Northern Tier Mine, and its accumulated depletion, would appear in Salter Mining Company's balance sheet after the first year of operations.
F150 Company has the following information pertaining to its mining operations: Estimated cost of restoring property after mining is completed 400,000 Number of tons mined during the current year 50,000 tons Cost of land 6,000,000 Estimated number of tons of ores mined 400,000 tons Sales value of the land after mining 300,000 Development costs incurred 500,000 Number of tons sold during the current year 35,000 tons Cost of production (excluding depletion) P 7.00 The company already recognized the estimated restoration cost immediately after the resource property was acquired. How much would be the company’s cost of goods sold? a. 525,000 c. 787,500 b. 603,700 d. 822,500
Eastern Mindanao. Because the mine is located deep in the Problem 28-6 (IAA) In 2017, Sunflower Company acquired a silver minė in Eastern Mindanao. Because the mine is located deep in the Mindanao frontier, Sunflower Company was able to acquire the mine for the low price of P50,000. In 2018, Sunflower Company constructed a road to the silver mine costing P5,000,000. Improvements and other development costs made in 2018 cost P750,000. Because of the improvements to the mine and to the surrounding land, it is estimated that the mine can be sold for P600,000 when mining activities are complete. During 2019, five buildings were constrücted near the mine site to house the mine workers and their families. The total cost of the five buildings was P2,000,000. Estimated residual value is P200,000. In 2020, geologists estimated that 4,000,000 tons of silver ore could be removed from the mine for refining. During 2020, the first year of operations, only 500,000 tons of silver ore were removed…
Journalizing natural resource depletion Cannon Mountain Mining paid $462,300 for the right to extract mineral assets from a 400,000-ton deposit. In addition to the purchase price, Cannon also paid a $900 filing fee, a $1,800 license fee to the state of Nevada, and $55,000 for a geological survey of the property. Because Cannon 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, Cannon removed and sold 50,000 tons of 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.
Natural Resources The Hollister Company acquires a silver mine at the cost of $1,300,000 on January 1. Along with the purchase price Hollister pays additional costs associated with development of $50,000. Hollister expects the mine will have a salvage value of $100,000 once all the silver has been mined. Best estimates are that the mine contains 250,000 tons of ore. Required a. Prepare the entry to record the purchase of the silver mine. b. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined and all the ore is sold. c. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined but only 15,000 tons of the ore are sold. Description Debit Credit a. Answer Answer Answer Answer Answer Answer Purchase of silver mine b. Answer Answer Answer Answer Answer Answer To record depletion on silver mine. c. Silver inventory Answer Answer Answer…
Natural Resources The Hollister Company acquires a silver mine at the cost of $1,300,000 on January 1. Along with the purchase price Hollister pays additional costs associated with development of $50,000. Hollister expects the mine will have a salvage value of $100,000 once all the silver has been mined. Best estimates are that the mine contains 250,000 tons of ore. Required a. Prepare the entry to record the purchase of the silver mine. b. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined and all the ore is sold. C. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined but only 15,000 tons of the ore are sold. Description Debit Credit a. Purchase of silver mine b. 0. To record depletion on silver mine. c. Silver inventory 0. To record depletion on silver mine.
Natural Resources The Hollister Company acquires a silver mine at the cost of $1,300,000 on January 1. Along with the purchase price Hollister pays additional costs associated with development of $50,000. Hollister expects the mine will have a salvage value of $100,000 once all the silver has been mined. Best estimates are that the mine contains 250,000 tons of ore. Required a. Prepare the entry to record the purchase of the silver mine. b. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined and all the ore is sold. c. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined but only 15,000 tons of the ore are sold. Description Credit a. b. c. Silver inventory esc + To record depletion on silver mine. Check ! 1 To record depletion on silver mine. Q Purchase of silver mine ◆ A + 2 W S + # 3 Debit E D 80 0 0 0 0 0 0 0 $ 4 R F 0 0 0 0 0 0 0 % 5 pe T G 6 Y & 7 H U * 8 J FB 1 ( 9 K O 0 L P 4) F11 +…
Required information [The following information applies to the questions displayed below.] Last Chance Mine (LCM) purchased a coal deposit for $750,000. It estimated it would extract 12,000 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1 million, $3 million, and $2 million for years 1 through 3, respectively. During years 1–3, LCM reported net income (loss) from the coal deposit activity in the amount of ($20,000), $500,000, and $450,000, respectively. In years 1–3, LCM actually extracted 13,000 tons of coal as follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.) (1) (2) Depletion (2)/(1) Tons Extracted per Year Tons of Coal Basis Rate Year 1 Year 2 Year 3 12,000 $750,000 $62.50 2,000 7,200 3,800 b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)?
Natural Resource Depletion and Depreciation of Related Plant Assets P5. Bychowski Company purchased land containing an estimated 10 million tons of ore for a cost of $3,300,000. The land without the ore is estimated to be worth $600,000. The company expects that all the usable ore can be mined in 10 years. Buildings costing $300,000 with an estimated useful life of 20 years were erected on the site. Equipment costing $360,000 with an estimated useful life of 10 years was installed. Because of the remote location, neither the buildings nor the equipment has an estimated residual value. During its first year of operation, the company mined and sold 450,000 tons of ore. REQUIRED 1. Compute the depletion charge per ton. 2. Compute the depletion expense that Bychowski should record for the year. 3. Determine the depreciation expense for the year for the buildings, making it pro- portional to the depletion. 4. Determine the depreciation expense for the year for the equipment under two alter-…
5. Usula Corporation's subsidiary Pensive oil drills a well with the intention of extracting oil from a known reservoir. It incurs the following costs related to the acquisition of property and development of the site. $280,000 $23,000 Land purchase • Road construction • Drill pad construction $48,000 • Drilling fees Usula Oil estimates that it will incur a site restoration cost of $57,000 once extraction is complete. Usula's geologists estimate that the proven oil reserves that are accessed by the well are 400,000 barrels. How much would the depletion charge be for 270,000 barrels? $192,000
Natural Resources The Hollister Company acquires a silver mine at the cost of $2,100,000 on January 1. Along with the purchase price Hollister pays additional costs associated with development of $50,000, Hollister expects the mine will have a salvage value of $300,000 once all the silver has been mined. Best estimates are that the mine contains 250,000 tons of ore. Required a: Prepare the entry to record the purchase of the silver mine. b. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined and all the ore is sold, c. Prepare the December 31 year-end adjusting entry to record depletion is 60,000 tons of ore are mined but only 15,000 tons of the are are sold Description Credit 4 # Purchase of silver mine # = To record depletion on silver mine Siver inventory To record depletion on silver mine Debit