On July 1, 2017, Lethargic Company, a calendar year entity, purchased the rights to a mine. The total purchase price was 14,000,000 of which 2,000,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased new equipment on July 1, 2017. The equipment was purchased for 8,000,000 and had a useful life of 8 years. However, after all the resource is removed, the equipment will be of no use and will be sold for 500,000. What is the depreciation of the equipment for 2017?

On July 1, 2017, Lethargic Company, a calendar year entity, purchased the rights to a mine. The total purchase price was 14,000,000 of which 2,000,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased new equipment on July 1, 2017. The equipment was purchased for 8,000,000 and had a useful life of 8 years. However, after all the resource is removed, the equipment will be of no use and will be sold for 500,000. What is the depreciation of the equipment for 2017?

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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