On July 1, 2020, Splish Brothers Inc. invested $640,710 in a mine estimated to have 791,000 tons of ore of uniform grade. During the last 6 months of 2020, 102,000 tons of ore were mined. Calculate depletion cost per unit. (Round answer to 2 decimal places, e.g. 0.50.) Prepare the journal entry to record depletion. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Assume that the 102,000 tons of ore were mined, but only 79,000 units were sold. Indicate how are the costs applicable to the 23,000 unsold units reported? The costs pertaining to the unsold units are reported in _________ as part of __________ at $ __________.
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
On July 1, 2020, Splish Brothers Inc. invested $640,710 in a mine estimated to have 791,000 tons of ore of uniform grade. During the last 6 months of 2020, 102,000 tons of ore were mined.
Calculate depletion cost per unit. (Round answer to 2 decimal places, e.g. 0.50.)
Prepare the
Assume that the 102,000 tons of ore were mined, but only 79,000 units were sold. Indicate how are the costs applicable to the 23,000 unsold units reported?
The costs pertaining to the unsold units are reported in _________ as part of __________ at $ __________.
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