Perez Company acquires an ore mine at a cost of $4,200,000. It incurs additional costs of $1,176,000 to access the mine, which isestimated to hold 3,000,000 tons of ore. 280,000 tons of ore are mined and sold the first year. The estimated value of the land afterthe ore is removed is $600,000. Calculate the depletion expense from the information given.1. & 2. Prepare the entry to record the cost of the ore mine and year-end adjusting entry.Complete this question by entering your answers in the tabs below.DepletionExpenseGeneralJournalCalculate the depletion expense from the information given.Note: Round "Depletion per unit" to 3 decimal places.CostSalvageAmount subject to depletionTotal units of capacityDepletion per unitUnits extracted and sold in periodDepletion expense

Step 1: Calculation of depletion expense.Cost ($4,200,000+$1,176,000)$5,376,000Salvage…

Answered: Perez Company acquires an ore mine at a…

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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7. Copper Mines, Inc (CMI) . purchased property for the purpose of extracting copper ore. CMl paid $3,500,000 for the property plus $100,000 closing costs. CMl estimates it will be able to extract 800,000 tons of copper ore from the property over the next 10 years. The actual number of tons of copper ore extracted during the next ten years are as follows: 95,000 tons each in years 1,2,3; 80,000 tons each of years 4,5,6&7; and 75,000 tons each of years 8,9,& 10. It is believed that after 10 years the extractable ore will have been removed and the land will be useful for cattle grazing with an estimated value of $200,000. What is the amount of expense related to the ore extraction to be recognized for year 8? a) b) c) d) e) 318,750 330,000 340,000 350,000 360,000
Pharoah Company purchased for $4,543,000 a mine that is estimated to have 45,430,000 tons of ore and no salvage value. In the first year, 14,040,000 tons of ore are extracted. (a1) Calculate depletion cost per unit. (Round answer to 2 decimal places, e.g. 0.50.) Depletion cost per unit $ per ton Save for Later (a2) The parts of this question must be completed in order. This part will be available when you complete the part above.
At the beginning of Year 1, Ithaca Incorporated purchased land for $1,500,000 from which it expects to extract 800,000 tons of minerals. The estimated residual value is $250,000. What is Ithaca's unit depletion rate? Round your answer to two decimal places.
Last Chance Mine (LCM) purchased a coal deposit for $1,654,350. It estimated it would extract 13,450 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.35 million, $6.25 million, and $5.2 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 ($16,400), $705,000, and $577,500, respectively. In years 1–3, LCM extracted 14,450 tons of coal as follows: (1) Tons of Coal (2) Basis Depletion (2)/(1) Rate Tons Extracted per Year Year 1 Year 2 Year 3 13,450 $1,654,350 $123.00 2,550 7,450 4,450 b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)?
Calculate the amortization and depletion for each transaction. A gold garment production company acquired the rights to a mine for $520,000,000. In the mine, it is estimated that there are 150,000,000 tons of gold. A quantity of 50,000,000 tons was sold in the year.Calculate the depletion rate and the depletion expense for the year.You must provide the steps of how you arrived at the result.
Clean Company acquired a tract of land containing an extractable natural resource. Clean is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2,000,000 tons, and that the land will have a value of $1,000,000 after restoration. Relevant cost information follows: Land $7,500,000 Estimated restoration costs 1,500,000 If Clean maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material? Oa. $4.00 Ob. $3.20 Oc. $2.60 d. $3.00
The Platinum Touch Mining Company paid $4,000,000 for a parcel of land, including the mining rights. In addition, the company spent $564,700 to prepare the site for mining operations. When mining is completed, it is estimated that the residual value of the asset will be $800,000. Scientists estimate that the site contains 150,000 ounces of platinum. A. What is the average depletion cost per ounce? B. If 12,200 ounces were mined in the first year of operation, what is the amount of the depletion cost?
Dow Deep Mining Co acquired mineral rights for $56,000,000. The mineral deposit is estimated at 70,000,000 tons. During the current year, 18,200,000 tons were mined an a. Determine the depletion rate. It required, round your answer to two decina aces A) Depletion rate per ton.
Depletion: Calculating and Journalizing Mineral Works Co. acquired a salt mine at a cost of $1,700,000, with no expected salvage value. The estimated number of units available for production from the mine is 3,400,000 tons. a. During the first year, 200,000 tons are mined and sold. b. During the second year, 600,000 tons are mined and sold. Required: 1. Calculate the amount of depletion expense for both years. Year 1 Year 2 2. Prepare general journal entries for depletion expense. Page: 1 DOC. POST. NO. REF. DATE ACCOUNT TITLE DEBIT CREDIT 1 Year 1 2 3 3 4 Year 2 4 5 6 6
Depletion: Calculating and Journalizing Mineral Works Co. acquired a salt mine at a cost of $1,925,000, with no expected salvage value. The estimated number of units available for production from the mine is 3,500,000 tons. a. During the first year, 220,000 tons are mined and sold. b. During the second year, 290,000 tons are mined and sold. Required: 1. Calculate the amount of depletion expense for both years. Year 1 Year 2 2. Prepare general journal entries for depletion expense. Page: 1 DOC. POST. DATE ACCOUNT TITLE DEBIT CREDIT NO. REF. 1 Year 1 1 2 3 3 4 Year 2 4 5
Sands Company purchased mining rights for $500,000. It expects to harvest 1 million tons of ore over the next 5 years. During the current year, Sands mined 350,000 tons of ore. The entry to journalize the depletion would include a
Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and development costs totaled $7.5 million. Extraction activities began on July 1, 2024. After the copper is extracted in approximately six years, Schefter is obligated to restore the land to its original condition, including constructing a park. The company's controller has provided the following three cash flow possibilities for the restoration costs: 1. 2. 3. Cash Flow $ 630,000 730,000 830,000 Probability 30% 30% 40% The company's credit-adjusted, risk-free rate of interest is 4%, and its fiscal year ends on December 31. Note: Use appropriate factor(s) from the tables provided. Round other intermediate calculations to the nearest whole dollar. Enter your answers in whole dollars. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. What is the initial cost of the copper mine? 2. How much accretion expense will Schefter report in its 2024 income statement? 3. What is the book…

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