Problem 07-36 (Static) [LO 7-10]A&Z incurred $450,000 of capitalized costs to develop a uranium mine. The corporation's geologists estimated that the mine wouldproduce 900,000 tons of ore. During the year, 215,000 tons were extracted and sold. A&Z's gross revenues from the sales totaled$689,000, and its operating expenses for the mine were $200,000.Required:Calculate A&Z's depletion deduction.Depletion deduction$ 105,000

Step 1: Given DataCapitalized costs to develop the uranium mine: $450,000Estimated total ore to be…

Answered: Problem 07-36 (Static) [LO 7-10] A&Z…

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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-d PR 6-37 (Algo) Cost Behavior and Analysis; High-Low Method (LO 6- 2, 6-4, 6-5) Antioch Extraction, which mines ore in Montana, uses a calendar year for both financial- reporting and tax purposes. The following selected costs were incurred in December, the low point of activity, when 1,500 tons of ore were extracted: Straight-line depreciation Charitable contributions* Mining labor/fringe benefits Royalties Trucking and hauling $ 35,000 10,000 277,500 145,000 279,915 *Incurred only in December. Peak activity of 2,800 tons occurred in June, resulting in mining labor/fringe benefit costs of $518,000, royalties of $236,000, and trucking and hauling outlays of $364,915. The trucking and hauling outlays exhibit the following behavior: Less than 1,500 tons. From 1,500 to 1,999 tons From 2,000 to 2,499 tons From 2,500 to 2,999 tons $ 237,415 279,915 322,415 364,915 Antioch uses the high-low method to analyze costs. Required: 1. Classify the five costs listed in terms of their behavior:…
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Required information [The following information applies to the questions displayed below.] Last Chance Mine (LCM) purchased a coal deposit for $2,088,450. It estimated it would extract 17,550 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.15 million, $4.35 million, and $3.1 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 ($15,400), $667,500, and $662,500, respectively. In years 1-3, LCM extracted 18,550 tons of coal as follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.) (1) Tons of Coal 17,550 (2) Basis $2,088,450 Depletion (2)/(1) Rate $119.00 Year 1 2,400 Tons Extracted per Year Year 2 11,450 Year 3 4,700 c. Using the cost and percentage depletion computations from parts (a) and (b), what is LCM's actual depletion expense for each year? Depletion Expense Year 1 Year 2 $…
1. In 20X4, ABC Mining Inc. purchased land for P5,600,000 that had a natural resource supply estimated at 4,000,000 tons. When the natural resources are removed, the land has an estimated value of P640,000. The required restoration cost for the property is estimated to be P800,000. Development and road construction costs on the land were P560,000, and a building was constructed at a cost of P88,000 with an estimated P8,000 salvage value when all the natural resources have been extracted. During 20X5, additional development costs of P272,000 were incurred, but additional resources were not discovered. Production for 20X4 and 20X5 was 700,000 tons and 900,000 tons, respectively. Round depletion and depreciation rates to 2 decimal places. In the year 20X5, the total inventoriable cost is?
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E10-10 On July 1, 2002, Phillips Inc. invested $480,000 in a mine estimated to have 800,000 tonnes of ore. At the end of production at the mine, the company estimates it will have to spend $150,000 to restore the site to an environmentally acceptable condition. The property will then be sold for $90,000. During the last six months of 2002, 100,000 tonnes of ore were mined and sold. Instructions (a) Prepare the journal entry to record the amortization expense. (b) Assume that 100,000 tonnes of ore were mined but only 80,000 were sold. How much amortiza- tion expense is recorded in 2002? How are the costs applied to the 20,000 unsold tonnes?
M77.

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