old Mining Company has purchased a tract of mineral land for $972,000. It is estimated that this tract will yield 1 ith sufficient mineral content to make mining and processing profitable. It is further estimated that 6,480 tons of the first and last year and 12,960 tons every year in between. (Assume 11 years of mining operations.) The land ge value of $32,400. ompany builds necessary structures and sheds on the site at a cost of $38,880. It is estimated that these structur 15 years but, because they must be dismantled if they are to be moved, they have no salvage value. The company the buildings elsewhere. Mining machinery installed at the mine was purchased secondhand at a cost of $64,800 inery cost the former owner $162,000 and was 50% depreciated when purchased. Marigold Mining estimates th machinery will still be useful when the present mineral resources have been exhausted, but that dismantling and re st about offset its value at that time. The company does not intend to use the machinery elsewhere. The remainin
old Mining Company has purchased a tract of mineral land for $972,000. It is estimated that this tract will yield 1 ith sufficient mineral content to make mining and processing profitable. It is further estimated that 6,480 tons of the first and last year and 12,960 tons every year in between. (Assume 11 years of mining operations.) The land ge value of $32,400. ompany builds necessary structures and sheds on the site at a cost of $38,880. It is estimated that these structur 15 years but, because they must be dismantled if they are to be moved, they have no salvage value. The company the buildings elsewhere. Mining machinery installed at the mine was purchased secondhand at a cost of $64,800 inery cost the former owner $162,000 and was 50% depreciated when purchased. Marigold Mining estimates th machinery will still be useful when the present mineral resources have been exhausted, but that dismantling and re st about offset its value at that time. The company does not intend to use the machinery elsewhere. The remainin
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Marigold Mining Company has purchased a tract of mineral land for $972,000. It is estimated that this tract will yield 129,600 tons of
ore with sufficient mineral content to make mining and processing profitable. It is further estimated that 6,480 tons of ore will be
mined the first and last year and 12,960 tons every year in between. (Assume 11 years of mining operations.) The land will have a
salvage value of $32,400.
The company builds necessary structures and sheds on the site at a cost of $38,880. It is estimated that these structures can
serve 15 years but, because they must be dismantled if they are to be moved, they have no salvage value. The company does not intend
to use the buildings elsewhere. Mining machinery installed at the mine was purchased secondhand at a cost of $64,800. This
machinery cost the former owner $162,000 and was 50% depreciated when purchased. Marigold Mining estimates that about half of
this machinery will still be useful when the present mineral resources have been exhausted, but that dismantling and removal costs
will just about offset its value at that time. The company does not intend to use the machinery elsewhere. The remaining machinery
will last until about one-half the present estimated mineral ore has been removed and will then be worthless. Cost is to be allocated
equally between these two classes of machinery.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb4f8e104-0496-4698-9dd3-69108cc2fbda%2F02dfd78e-8860-44c5-996d-080357d5538e%2F4k2o139_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Marigold Mining Company has purchased a tract of mineral land for $972,000. It is estimated that this tract will yield 129,600 tons of
ore with sufficient mineral content to make mining and processing profitable. It is further estimated that 6,480 tons of ore will be
mined the first and last year and 12,960 tons every year in between. (Assume 11 years of mining operations.) The land will have a
salvage value of $32,400.
The company builds necessary structures and sheds on the site at a cost of $38,880. It is estimated that these structures can
serve 15 years but, because they must be dismantled if they are to be moved, they have no salvage value. The company does not intend
to use the buildings elsewhere. Mining machinery installed at the mine was purchased secondhand at a cost of $64,800. This
machinery cost the former owner $162,000 and was 50% depreciated when purchased. Marigold Mining estimates that about half of
this machinery will still be useful when the present mineral resources have been exhausted, but that dismantling and removal costs
will just about offset its value at that time. The company does not intend to use the machinery elsewhere. The remaining machinery
will last until about one-half the present estimated mineral ore has been removed and will then be worthless. Cost is to be allocated
equally between these two classes of machinery.
![Also compute the depreciation and depletion for the first year assuming actual production of 5,400 tons. Nothing occurred during
the year to cause the company engineers to change their estimates of either the mineral resources or the life of the structures and
equipment. (Round per unit answers to 2 decimal places, e.g. 0.45 for computational purposes and final answers to O decimal places, e.g.
45,892.)
Depletion
LA
$
tA
Depreciation $](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb4f8e104-0496-4698-9dd3-69108cc2fbda%2F02dfd78e-8860-44c5-996d-080357d5538e%2Fl6yiuvg_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Also compute the depreciation and depletion for the first year assuming actual production of 5,400 tons. Nothing occurred during
the year to cause the company engineers to change their estimates of either the mineral resources or the life of the structures and
equipment. (Round per unit answers to 2 decimal places, e.g. 0.45 for computational purposes and final answers to O decimal places, e.g.
45,892.)
Depletion
LA
$
tA
Depreciation $
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
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!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
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
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education