On January 2, 2019, Whistler Company purchased land for $500,000, from which it is estimated that 400,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $59,000, after which it could be sold for$30,000.During 2019, Whistler mined 78,000 tons and sold 64,000 tons. During 2020, whistler mined 106,000 tons and sold 96,000 tons. At the beginning of 2021, Whistler spent an additional $90,000, which increased the reserves by 63,000 tons. In 2021, Whistler mined138,000 tons and sold 140,000 tons. Whistler uses a FIFO cost flow assumption.Required:If required, round the depletion rate to the nearest cent and round the final answers tonearest dollar.1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021.2019 Depletion deducted from income $Depletion included in inventory2020 Depletion deducted from income $Depletion included in inventory2021Depletion deducted from income $Depletion included in inventory2. Complete the natural resources section of the balance sheet on December 31, 2019, 2020, and 2021, assuming that an accumulated depletion account is used.Whistler CompanyBalance Sheet (partial)December 31, 2019 - 2021December 31, 2019Mineral ore resourcesLess: Accumulated depletionDecember 31, 2020Mineral ore resourcesLess: Accumulated depletionDecember 31, 2021Mineral ore resourcesLess: Accumulated depletion3. Assume Whistler's discount rate was 10%. What is the balance in the asset retirement obligation at 2019, 2020, and 2021?Whistler CompanyAsset retirement obligation2019 - 2021December 31, 2019 $December 31, 2020 $December 31, 2021 $

Requirement 1: Unit Depletion rate per ton = ($500,000 + $ 59,000) - $30,000 ÷ 400,000 tons =…

Answered: urces ed depletion 20 urces ed…

urces ed depletion 20 urces ed depletion 21 urces ed depletion er's discount rate was 10%. What is the balance in the asset retirement obligation at 2019, 2020, and 2021? Company ent obligation 2021

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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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

On January 2, 2019, Whistler Company purchased land for $500,000, from which it is estimated that 400,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $59,000, after which it could be sold for
$30,000.
During 2019, Whistler mined 78,000 tons and sold 64,000 tons. During 2020, whistler mined 106,000 tons and sold 96,000 tons. At the beginning of 2021, Whistler spent an additional $90,000, which increased the reserves by 63,000 tons. In 2021, Whistler mined
138,000 tons and sold 140,000 tons. Whistler uses a FIFO cost flow assumption.
Required:
If required, round the depletion rate to the nearest cent and round the final answers to
nearest dollar.
1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021.
2019 Depletion deducted from income $
Depletion included in inventory
2020 Depletion deducted from income $
Depletion included in inventory
2021
Depletion deducted from income $
Depletion included in inventory
2. Complete the natural resources section of the balance sheet on December 31, 2019, 2020, and 2021, assuming that an accumulated depletion account is used.
Whistler Company
Balance Sheet (partial)
December 31, 2019 - 2021
December 31, 2019
Mineral ore resources
Less: Accumulated depletion
December 31, 2020
Mineral ore resources
Less: Accumulated depletion
December 31, 2021
Mineral ore resources
Less: Accumulated depletion
3. Assume Whistler's discount rate was 10%. What is the balance in the asset retirement obligation at 2019, 2020, and 2021?
Whistler Company
Asset retirement obligation
2019 - 2021
December 31, 2019 $
December 31, 2020 $
December 31, 2021 $

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