f 18,000 tons were extracted during the first year, which of the following would be included in the entry to record the depletion?
Q: Early in the current year, Tokay Co. purchased the Silverton Mine at a cost of $15,500,000. The mine…
A: Computation for the book value of the mine at year end is as follows:First we need to calculate the…
Q: Mareos Company purchased for $3,800,000 a mine estimated to contain 3,000,000 tons of ore. When the…
A: Depreciation per ton (Units of production method) =(cost of Asset - salvage value ) / Estimated…
Q: Coal Mining acquires a property at a cost of P10,000,000. Intangible development costs amounted to…
A: Journal entry is a primary entry that records the financial transactions initially.
Q: Bowman Corporation is considering an investment in special-purpose equipment to enable the company…
A: Net present value is the difference between present value cash inflow minus present value of cash…
Q: Perez Company acquires an ore mine at a cost of $1,680,000. It incurs additional costs of $470,400…
A: The cost of ore mine will include cost of purchase plus cost incurred to access the mine.
Q: For $42,950,000, Wesco Developers purchased land which their experts believe to contain 28.5 million…
A: Formula used for calculation: Depletion expense = ( Asset cost - Salvage value ) / Total estimated…
Q: Sergei Company purchases land for $4,000,000 from which it expects to extract 2,000,000 tons of…
A: Unit depletion rate = (Cost of the coal mine - residual value) / Estimated tons of coal
Q: Bowman Corporation is considering an investment in special-purpose equipment to enable the company…
A: Formula used: Payback Period = Equipment costsNet Income including Depreciation Return on Average…
Q: A new year had begun, JK Company, a mining institute, purchased a mineral mine for P56,000,000 with…
A: Depletion refers to the reduction in value. It is the non-cash expense of the business recorded by…
Q: Bramble Corporation acquires a coal mine at a cost of $456,000. Intangible development costs total…
A: Depletion Expenses:- For the use of Natural Resources, this is an expense that gets charged and…
Q: Tamarisk Corporation acquires a coal mine at a cost of $464,000. Intangible development costs total…
A: Depletion expense = (Cost - Salvage value) * coal extracted / Total coal estimated to be available =…
Q: ABC Corporation purchases a machine worth P 1,500,000. The freight cost is P 100,000 and set-up…
A: Purchase price = P 1,500,000 Freight cost = P 100,000 Set up charges = P 250,000 Salvage value = P…
Q: Wake Coffee Co. has a piece of equipment no longer needed for production. The company purchased the…
A: Introduction:- A piece of machinery at Wake Coffee Co. is no more in use. The machinery was…
Q: Novak Corporation acquires a coal mine at a cost of $ 831,000. Intangible development costs total $…
A: Total Cost of mine = Total purchase price + Development costs + restoration costs =…
Q: development costs amounted to P2,400,000. After extraction has occurred, SMR Coal Mining must…
A: Ans. Mining, timber and petroleum industries mostly use the accounting concept of depletion. It is…
Q: In March, 2007, ABC Co. purchased a coal mine for P6,000,000. Removable coal is estimated at…
A: Total cost of mine = Purchase costs + Restoration costs + Development costs = P6000000 + 720000 +…
Q: Pina Colada Corporation acquires a coal mine at a cost of $ 863,800. Intangible development costs…
A: Solution:- Calculation of Depletion note per ton as follows;- =($863,800+$221,000+$93,000-$120,000)…
Q: In January 2018, HUKAY Mining Corporation purchased a mineral mine for P7,200,000 with removable ore…
A: Depletion can be defined as the method that is used to determine and allocate the cost of extracting…
Q: On July 1, 2021, Lambda Company, a calendar year entity purchased the rights to a mine. The total…
A: Cost of right = P14,000,000 - P2,000,000 = P12,000,000 Reserves used during the year = 25,000 tons x…
Q: On June 1, 2021, ABC Company purchased rights to a mine for P30,000,000, of which, P3,000,000 was…
A: Cost of mine = Total purchase value - Amount allocable to land = 30000000 - 3000000 = 27,000,000
Q: Waterway Corporation acquires a coal mine at a cost of $ 476,000. Intangible development costs total…
A: Depletion: It is often defined as a fall in the value of a natural resource because of its…
Q: For $18,048,000, R.R. Michaels Refining purchased land which their experts believe to contain 18.8…
A: Introduction: Depreciation: A decrease in the value of fixed assets of the company because of usage,…
Q: Gomez Corporation purchased land for P 6,000,000. The company expected to extract 1,000,000 tons of…
A: The question is multiple choice question. Required Choose the Correct Option.
Q: On July 1,2021, Phantom Corporation purchased the rights to a mine for a total purchase price of…
A: The depreciation expense is charged on fixed assets as reduction in the value of fixed assets with…
Q: Perez Company acquires an ore mine at a cost of $3,640,000. It incurs additional costs of $1,019,200…
A: Depletion is charged to natural resources as depreciation is charged to fixed assets.
Q: LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million…
A: Purchase price of Land = P120,000,000 Exploration cost = P10,000,000 Dry well cost = P1,600,000…
Q: On Jan 1, 20X1 ABC Mining Co. purchased a mine for P2,640,000 with removable ore estimated at…
A: Depletion is the reduction in the value of natural resources due to extraction. In accounting, this…
Q: LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million…
A: Cost of land = P120,000,000 Expected minerals to be extracted = 5,000,000 Salvage value = P6,000,000…
Q: Questions: What is the depletion for 2020? * What is the depreciation for 2020? *
A: Tangible assets are depreciated where as intangible assets/ rights are depleted over the useful…
Q: At the beginning of current year, Nilli Company purchased a coal mine for P30,000,000. Removable…
A: Depletion expense is a charge against profits for the use of natural resources.it is most commonly…
Q: Lipaopao Corporation acquires a coal mine at a cost of p 5,000,000. Intangible development costs…
A: Initial cost of asset will include cost of acquisition, development cost and present value of…
Q: Winett Corporation is considering an investment in special-purpose equipment to enable the company…
A: Annual cash flows = Net Income + Depreciation = 79,500+ 26,500= $106,000 As annual cash flows are…
Q: Pronghorn Corporation acquires a coal mine at a cost of $484,000. Intangible development costs total…
A:
Q: Vandeventer Corporation purchased land containing 25.4 million barrels of naphthenic crude oil for…
A: Annual depletion cost: It is the amount by which the cost of natural resource is depleted over an…
Q: The Weber Company purchased a mining site for $580,128 on July 1. The company expects to mine ore…
A: Given, Cost of machone = $580,128 Total tons = 85,978 Depletion expense per ton = (Cost - Salvage…
Q: Sunland Mining Company has purchased a tract of mineral land for $1,134,000. It is estimated that…
A: Depletion is the diminution in the value of the mining resources after their extraction and…
Q: LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million…
A: Purchase price of land = P120,000 Expected tons of minerals to be extracted = 5,000,000 Residual…
Q: Bowman Corporation is considering an investment in special-purpose equipment to enable the company…
A: Pay back Period = Cash Outflow / Annual Cashflow Return on Average Investment = Net Income /…
Q: At the beginning of the current year, Nili company purchased a coal mine for 30,000,000. Removable…
A: The depletion expense is charged on coal mine as reduction in value of mine with coal removed.
Q: LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million…
A: LM Corporation's Purchased 20 acres of land = P120000000 Company expects the extract of minerals = 5…
Q: 000 tons. In 2018, the company mined 140,000 tons and sold 130,000 tons. The company uses a FIFO…
A: Depletion Expense: The cost allocation method used for natural resources like mining deposits,…
Q: Crane Corporation acquires a coal mine at a cost of $404,000. Intangible development costs total…
A: The question is based on the concept of Journal Entry.
Q: n July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000…
A: Solutions: 1) Depletion is charged in books in order to record reduction in value of natural…
Q: n July 1, 2015, Lam Company, a calendar year corporation, purchased the rights to mine. The total…
A: Depreciation means the loss in value of assets because of usage of assets , passage of time or…
Q: Josey Company entered into a contract to acquire a new machine for its factory. The machine, which…
A: The cost of machine comprises its purchase price, duties and taxes which are non recoverable , and…
Q: Everly Corporation acquires a coal mine at a cost of $400,000. Intangible development costs total…
A: Depletion: Depletion is a process in which the cost of natural resources like oil reserves, mineral…
Q: 7. On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which…
A: Depreciation is charged to record reduction in value of asset over the period of time.
Q: At the beginning of the current year, Handsome Company purchased a mineral mine for P36,000,000 with…
A: Total cost of mineral mine = purchased costs + development costs = P36,000,000 + P10,800,000 =…
Q: NOS Corp. purchased equipment for $180,000. They sold the equipment at the end of three years for…
A: Depreciation is a way to reduce the cost of asset over a period of time due to usage, wear &…
Q: On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000…
A: Depletion is charged in books in order to record reduction in value of natural resources over the…
Penny Coal Mining acquires property at a cost of 10,000,000 and
development costs amounted to 2,400,000. After extraction has
occurred, the company must restore the property (the estimated present value of the obligation is 1,200,000), after which it can be sold for
3,400,000. The company estimates that 100,000 tons of coal can be
extracted. If 18,000 tons were extracted during the first year, which of the
following would be included in the entry to record the depletion?
a. Cr. Accumulated depletion - 3,060,000.
b. Cr. Inventory - 1,800,000
c. Dr. Accumulated depletion - 1,836,000
d. Dr. Inventory - 1,836,000
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- Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one it expects to use the truck for 26,000 miles. Calculate the annual depreciation expense.Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one million tons of ore within the mine. Gimli paid $23,100,000 for the rights and expects to harvest the ore over the next ten years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 90,000 tons Year 3: 100,000 tons Year 4: 110,000 tons Year 5: 130,000 tons Calculate the depletion expense for the next five years, and create the journal entry for year one.
- Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the assets life, and create the journal entry for year five.Urquhart Global purchases a building to house its administrative offices for $500,000. The best estimate of the salvage value at the time of purchase was $45,000, and it is expected to be used for forty years. Urquhart uses the straight-line depreciation method for all buildings. After ten years of recording depreciation, Urquhart determines that the building will be useful for a total of fifty years instead of forty. Calculate annual depreciation expense for the first ten years. Determine the depreciation expense for the final forty years of the assets life, and create the journal entry for year eleven.The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500, and it is expected to generate net after-tax operating cash flows, including depreciation, of $6,250 per year. The truck has a 5-year expected life. The expected salvage values after tax adjustments for the truck are given here. The company’s cost of capital is 10%. Should the firm operate the truck until the end of its 5-year physical life? If not, then what is its optimal economic life? Would the introduction of salvage values, in addition to operating cash flows, ever reduce the expected NPV and/or IRR of a project?
- Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for 1,500 each. The company uses group depreciation on a straight-line basis. Required: 1. Prepare journal entries to record the acquisition and the first years depreciation expense. 2. If one of the cars is sold at the beginning of the second year for 7,000, what journal entry is required?Montezuma Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for eight years. Montezuma uses the straight-line depreciation method. Calculate the annual depreciation expense. After three years of recording depreciation, Montezuma determines that the delivery truck will only be useful for another three years and that the salvage value will increase to $4,000. Determine the depreciation expense for the final three years of the assets life, and create the journal entry for year four.A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years. Prepare depreciation schedules reporting the depreciation expense, accumulated depreciation, and book value of the machine for each year under the double-declining-balance and sum-of-the-years-digits methods. For the double-declining-balance method, round the depreciation rate to two decimal places.
- For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.Pina Colada Corporation acquires a coal mine at a cost of $ 863,800. Intangible development costs total $ 221,000. After extraction has occurred, Pina Colada must restore the property (estimated fair value of the obligation is $ 93,000), after which it can be sold for $ 120,000. Pina Colada estimates that 8,600 tons of coal can be extracted. If 600 tons are extracted the first year, prepare the journal entry to record depletion. (If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit CreditTamarisk Corporation acquires a coal mine at a cost of $464,000. Intangible development costs total $116,000. After extraction has occurred, Tamarisk must restore the property (estimated fair value of the obligation is $92,800), after which it can be sold for $185,600. Tamarisk estimates that 4,640 tons of coal can be extracted.If 812 tons are extracted the first year, prepare the journal entry to record depletion. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount