Wildhorse Timber Company owns 9,000 acres of timberland purchased in 2014 at a cost of $1,652 per acre. At the time of purchase,the land without the timber was valued at $472 per acre. In 2015, Wildhorse built fire lanes and roads, with a life of 30 years, at a costof $99,120. Every year, Wildhorse sprays to prevent disease at a cost of $3,540 per year and spends $8,260 to maintain the fire lanesand roads. During 2016, Wildhorse selectively logged and sold 826,000 board feet of timber, of the estimated 4,130,000 board feet. In2017, Wildhorse planted new seedlings to replace the trees cut at a cost of $118,000.(a)Your Answer Correct Answer (Used)Determine the depreciation expense and the cost of timber sold related to depletion for 2016.(b)Depreciation expense$3,304Cost of timber sold$2,124,000Your answer is incorrect.Wildhorse has not logged since 2016. If Wildhorse logged and sold 1,062,000 board feet of timber in 2027, when the timbercruise (appraiser) estimated 5,900,000 board feet, determine the cost of timber sold related to depletion for 2027. (Do not roundintermediate calculations. Round final answers to O decimal places, e.g. 5,125.)Cost of timber sold$

Step 1:a)Computation of depreciation expense and cost of timber sold as follows :…

Answered: Wildhorse Timber Company owns 9,000…

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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New Style Corporation is a company that manufactures and sells chairs. On 1/1/20, the company purchases a piece of manufacturing equipment for $3,100,000 cash. The expected residual value is $200,000 and the useful life is 5 years. The company expects to produce 5,000,000 chairs with the equipment – 1,200,000 chairs in 2020; 1,400,000 chairs in 2021; 1,000,000 chairs in 2022; and 600,000 chairs 2023; and 800,000 chairs in 2024. Show your work. Round per unit to the nearest cent. Assume that New Style Corporation uses the Units-of-Activity method of depreciation.
University Car Wash built a deluxe car wash across the street from campus. The new machines cost $228,000 including installation. The company estimates that the equipment will have a residual value of $24,000. University Car Wash also estimates it will use the machine for six years or about 12,000 total hours, actual use per year as follows: 1 year 3,000 hours; 2 years 1,700 hours; 3 years, 1,800 hours, 4 years 2,200 hours 5 years 2,000 hours 6 years 1,300 hours. Prepare depreciation schedule for 6 years using the activity based method
Benson Freight Company owns a truck that cost $47,000. Currently, the truck’s book value is $22,000, and its expected remaining useful life is five years. Benson has the opportunity to purchase for $30,300 a replacement truck that is extremely fuel efficient. Fuel cost for the old truck is expected to be $7,000 per year more than fuel cost for the new truck. The old truck is paid for but, in spite of being in good condition, can be sold for only $19,000.RequiredCalculate the total relevant costs. Should Benson replace the old truck with the new fuel-efficient model, or should it continue to use the old truck until it wears out?
On January 1, 2024, reliable delivery service purchased a truck at a cost of $65,000. Before placing the truck in service, reliable spent $2500 painting it $2500 replacing tires, and $9500 over hauling the engine the truck should remain in service for five years and have a residual value of $6000. the trucks annual mileage is expected to be 23,000 miles in each of the first four years and 13,000 miles in the fifth year – 105,000 miles in total. And deciding which depreciation method to use Harold Parker, the general manager, requesting depreciation schedule for each of the depreciation methods.( straight line units of production and double declining balance.) prepare the schedules.
Wildhorse Logging and Lumber Company owns 2,970 acres of timberland on the north side of Mount Leno, which was purchased in 2013 at a cost of $600 per acre. In 2025, Wildhorse began selectively logging this timber tract. In May 2025, Mount Leno erupted. burying the timberland of Wildhorse under a foot of ash. All of the timber on the Wildhorse tract was downed. In addition, the logging roads, built at a cost of $152,200, were destroyed, as well as the logging equipment, with a net book value of $272,600. At the time of the eruption, Wildhorse had logged 20% of the estimated 524,200 board feet of timber. Prior to the eruption, Wildhorse estimated the land to have a value of $210 per acre after the timber was harvested. Wildhorse includes the logging roads in the depletion base. Wildhorse estimates it will take 3 years to salvage the downed timber at a cost of $653,000. The timber can be sold for pulp wood at an estimated price of $2 per board foot. The value of the land is unknown, but…
Concord Company owns 9,000 acres of timberland purchased in 2009 at a cost of $1,470 per acre. At the time of purchase, the land without the timber was valued at $420 per acre. In 2010, Concord built fire lanes and roads, with a life of 30 years, at a cost of $88,200. Every year, Concord sprays to prevent disease at a cost of $3,150 per year and spends $7,350 to maintain the fire lanes and roads. During 2011, Concord selectively logged and sold 735,000 board feet of timber, of the estimated 3,675,000 board feet. In 2012, Concord planted new seedlings to replace the trees cut at a cost of $105,000. A-Determine the depreciation expense and the cost of timber sold related to depletion
Need-Based Accounting Corp. has just purchased 10 photocopiers for a total cost of $500,000. The CCA rate for these photocopiers is 20%. The company plans to use these photocopiers for 10 years. By the end of the 10th year, the company expects to move into new imaging system that will no longer require the photocopiers, and the asset pool will then be closed. If the company can sell the photocopiers for $50,000 in 10 years’ time, what amount of terminal loss/CCA recapture can be claimed after the photocopiers have been sold? Assume that half-year rule applies. Please show all calculation steps:
On January 1, Celebrity Allures Inc. bought a new popcorn popper for one of their movie theaters. The popper cost $6,000. The expected life is 5 years with a salvage value of $500. The popper is expected to produce 50,000 buckets of popcorn over its life. In the first year, the popper produced 9,000 buckets of popcorn. In the second year, the popper produced 12,000 buckets of popcorn. What is the accumulated depreciation after the second year on the popcorn popper assuming double declining balance depreciation? $2,200 $3,840 $1,440 $2,400

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