Required information [The following information applies to the questions displayed below.] Last Chance Mine (LCM) purchased a coal deposit for $1,667,600. It estimated it would extract 18,950 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.32 million, $5 million, and $4.1 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 ($17,500), $702,500, and $695,000, respectively. In years 1-3, LCM extracted 19,950 tons of coal as follows: (1) Tons of Coal 18,950 Year 1 4,800 Tons Extracted per Year Year 2 9,150 Note: Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars. Depletion (2) Basis (2)+(1) Rate $1,667,600 $88.00 Year 1 Year 2 Year 3 b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)? Year 3 6,000 Percentage Depletion

Required information [The following information applies to the questions displayed below.] Last Chance Mine (LCM) purchased a coal deposit for $1,667,600. It estimated it would extract 18,950 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.32 million, $5 million, and $4.1 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 ($17,500), $702,500, and $695,000, respectively. In years 1-3, LCM extracted 19,950 tons of coal as follows: (1) Tons of Coal 18,950 Year 1 4,800 Tons Extracted per Year Year 2 9,150 Note: Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars. Depletion (2) Basis (2)+(1) Rate $1,667,600 $88.00 Year 1 Year 2 Year 3 b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)? Year 3 6,000 Percentage Depletion

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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On April 17, 2016, the Loadstone Mining Company purchased the rights to a coal mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the coal totaled $4,500,000. The company expects to extract 900,000 tons of coal during a four-year period. During 2016, 240,000 tons were extracted and sold immediately. Required: 1. Calculate depletion for 2016. 2. Discuss the accounting treatment of the depletion calculated in requirement 1.
Flannery Company engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities: January 1, Year 1 Purchased for $210,000 a silver mine estimated to contain 804,000 tons of silver ore. July 1, Year 1 Purchased for $1,850,000 cash a tract of land containing timber estimated to yield 3,010,000 board feet of lumber. At the time of purchase, the land had an appraised of $111,000. February 1, Year 2 Purchased for $794,000 a gold mine estimated to yield 30,200 tons of gold-veined ore. September 1, Year 2 Purchased oil reserves for $736,000. The reserves were estimated to contain 267,000 barrels of oil, of which 20,000 would be unprofitable to pump. Required Prepare the journal entries to account for the following items. Assume all purchase transactions were made with cash. (1) The Year 1 purchases. (2) Depletion on the Year 1 purchases, assuming that 66,000 tons of silver were mined…
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Required information [The following information applies to the questions displayed below.] Last Chance Mine (LCM) purchased a coal deposit for $750,000. It estimated it would extract 12.000 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1 million, $3 million, and $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 ($20,000). $500,000, and $450,000, respectively. In years 1-3, LCM actually extracted 13,000 tons of coal as follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.) (3) Tons of Coal 12,000 Year 1 2 3 Depletion (2) (2)/(1) Basis Rate $750,000 $62.50 Tons Extracted per Year Year 1 Year 21 Year 3 2,000 7,200 3,800 b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)? Percentage Depletion
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