dont give answer in image format Calculating Depletion, Depreciation, and Ending InventoryAerial Company acquired land containing natural resources on January 1 that it planned to extract for $6 million. The amount allocated to the land is $220,000. Surveys estimate that the recoverableresources will total 4 million tons. The company paid an additional $440,000 for development of the mining land to prepare for the extraction of the resources. The company also incurred $220,000to install mining equipment with a useful life of 8 years. The equipment will not be used for other projects. The company is obligated to restore the site after the extraction of resources. The presentvalue of this obligation is $55,000. The company extracted 528,000 tons of natural resources during the year and 495,000 tons were sold during the year.Requireda. Determine depletion for the natural resource during the year. Hint: Equipment cost is accounted for separately and its depreciation is recorded as Depreciation Expense.Numerator / Denominator = Depletion Rate4000000 $• Note: Use the depletion rate EXACTLY as shown above to calculate depletion below.Depletion during the year $b. Assuming that the company depreciates the cost of equipment using units-of-production, determine depreciation expense for the year.Depreciation expense for the year $ 26400c. Compute cost of goods sold for the year, and ending inventory on December 31 of this year.Cost of goods sold $Ending inventory $00↑

-Natural resources such as mines are accounted as wasting assets. -Depletion of wasting assets is…

Required a. Determine depletion for the natural resource during the year. Hint: Equipment cost is accounted for separately and its depreciation is recorded as Depreciation Expense. Numerator Denominator = Depletion Rate 4000000 $ • Note: Use the depletion rate EXACTLY as shown above to calculate depletion below. Depletion during the year s D b. Assuming that the company depreciates the cost of equipment using units-of-production, determine depreciation expense for the year. Depreciation expense for the year $ 26400 c. Compute cost of goods sold for the year, and ending inventory on December 31 of this year. Cost of goods sold $ Ending inventory $ 0 0

Required a. Determine depletion for the natural resource during the year. Hint: Equipment cost is accounted for separately and its depreciation is recorded as Depreciation Expense. Numerator Denominator = Depletion Rate 4000000 $ • Note: Use the depletion rate EXACTLY as shown above to calculate depletion below. Depletion during the year s D b. Assuming that the company depreciates the cost of equipment using units-of-production, determine depreciation expense for the year. Depreciation expense for the year $ 26400 c. Compute cost of goods sold for the year, and ending inventory on December 31 of this year. Cost of goods sold $ Ending inventory $ 0 0

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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