DepletionOn January 2, 2019, Whistler Company purchased land for $480,000, from which it isestimated that 410,000 tons of ore could be extracted. It estimates that the presentvalue of the cost necessary to restore the land is $56,000, after which it could be soldfor $29,000.During 2019, Whistler mined 80,000 tons and sold 68,000 tons. During 2020, Whistlermined 110,000 tons and sold 99,000 tons. At the beginning of 2021, Whistler spent anadditional $110,000, which increased the reserves by 70,000 tons. In 2021, Whistlermined 154,000 tons and sold 164,000 tons. Whistler uses a FIFO cost flow assumption.Required:If required, round the depletion rate to the nearest cent and round the finalanswers to the nearest dollar.1. Calculate the depletion included in the income statement and ending inventory for2019, 2020, and 2021.2019 Depletion deducted from income$Depletion included in inventory2020 Depletion deducted from income $Depletion included in inventory2021 Depletion deducted from incomeDepletion included in inventory2. 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 CompanyBalance Sheet (partial)December 31, 2019 - 2021December 31, 2019Mineral ore resourcesLess: Accumulated depletionDecember 31, 2020Mineral ore resources$4Less: Accumulated depletionDecember 31, 2021Mineral ore resourcesLess: Accumulated depletion3. Assume Whistler's discount rate was 9%. What is the balance in the asset retirementobligation at 2019, 2020, and 2021?Whistler CompanyAsset retirement obligation2019 - 2021December 31, 2019 $December 31, 2020 $December 31, 2021 $

Depletion refers to the measure which is linked with the depletion amount of the extraction of the…

On January 2, 2019, Whistler Company purchased land for $480,000, from which it is estimated that 410,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $56,000, after which it could be sold for $29,000. During 2019, Whistler mined 80,000 tons and sold 68,000 tons. During 2020, Whistler mined 110,000 tons and sold 99,000 tons. At the beginning of 2021, Whistler spent an additional $110,000, which increased the reserves by 70,000 tons. In 2021, Whistler mined 154,000 tons and sold 164,000 tons. Whistler uses a FIFO cost flow assumption.

On January 2, 2019, Whistler Company purchased land for $480,000, from which it is estimated that 410,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $56,000, after which it could be sold for $29,000. During 2019, Whistler mined 80,000 tons and sold 68,000 tons. During 2020, Whistler mined 110,000 tons and sold 99,000 tons. At the beginning of 2021, Whistler spent an additional $110,000, which increased the reserves by 70,000 tons. In 2021, Whistler mined 154,000 tons and sold 164,000 tons. Whistler uses a FIFO cost flow assumption.

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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