**Swifty Timber Company Overview**Swifty Timber Company acquired 9,000 acres of timberland in 2014, with an initial purchase cost of $1,442 per acre. At the time of acquisition, the land was appraised at $412 per acre without considering the value of the timber. In 2015, the company constructed fire lanes and roads costing $86,520, which are expected to last 30 years. Annually, Swifty incurs costs of $3,090 for disease prevention spraying and $7,210 for maintaining the fire lanes and roads. In 2016, Swifty selectively harvested 721,000 board feet from a total estimated 3,605,000 board feet available. The following year, in 2017, the company replanted new seedlings at a cost of $103,000 to replace the harvested timber.**Depreciation and Cost Analysis (a)**For 2016, Swifty Timber Company needs to determine two key financial figures:- **Depreciation Expense:** This involves calculating the reduction in value of long-term assets, such as the fire lanes and roads, given their lifespan and annual maintenance expenses.- **Cost of Timber Sold:** This calculates the expenses related directly to the depletion of timber due to logging activities. The cost considers the proportion of timber harvested relative to the total estimated board feet.These calculations are essential for accurate financial reporting and resource management within the company.

Deprecation is the reduction or the decrease in the value of fixed means due to the normal wear…

Swifty Timber Company owns 9,000 acres of timberland purchased in 2014 at a cost of $1,442 per acre. At the time of purchase, the land without the timber was valued at $412 per acre. In 2015, Swifty built fire lanes and roads, with a life of 30 years, at a cost of $86,520. Every year, Swifty sprays to prevent disease at a cost of $3,090 per year and spends $7,210 to maintain the fire lanes and roads. During 2016, Swifty selectively logged and sold 721,000 board feet of timber, of the estimated 3,605,000 board feet. In 2017, Swifty planted new seedlings to replace the trees cut at a cost of $103,000. (a) Determine the depreciation expense and the cost of timber sold related to depletion for 2016. Depreciation expense $ Cost of timber sold $

Swifty Timber Company owns 9,000 acres of timberland purchased in 2014 at a cost of $1,442 per acre. At the time of purchase, the land without the timber was valued at $412 per acre. In 2015, Swifty built fire lanes and roads, with a life of 30 years, at a cost of $86,520. Every year, Swifty sprays to prevent disease at a cost of $3,090 per year and spends $7,210 to maintain the fire lanes and roads. During 2016, Swifty selectively logged and sold 721,000 board feet of timber, of the estimated 3,605,000 board feet. In 2017, Swifty planted new seedlings to replace the trees cut at a cost of $103,000. (a) Determine the depreciation expense and the cost of timber sold related to depletion for 2016. Depreciation expense $ Cost of timber sold $

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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