A 2500-acre tract of timber is purchased by the Houser Paper Company for $1,200,000. The acquisitions department at Houser estimates the land will be worth $275 per acre once the timber is cleared. The materials department estimates that a total of 5 million board-feet of timber are available from the tract. The harvest schedule calls for equal amounts of the timber to be harvested each year for 5 years. Determine the depletion allowance for each year.
A 2500-acre tract of timber is purchased by the Houser Paper Company for $1,200,000. The acquisitions department at Houser estimates the land will be worth $275 per acre once the timber is cleared. The materials department estimates that a total of 5 million board-feet of timber are available from the tract. The harvest schedule calls for equal amounts of the timber to be harvested each year for 5 years. Determine the depletion allowance for each year.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 7PA: Tree Lovers Inc. purchased 100 acres of woodland in which the company intends to harvest the...
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A 2500-acre tract of timber is purchased by the Houser Paper
Company for $1,200,000. The acquisitions department at Houser
estimates the land will be worth $275 per acre once the timber is
cleared. The materials department estimates that a total of 5 million
board-feet of timber are available from the tract. The harvest
schedule calls for equal amounts of the timber to be harvested each
year for 5 years. Determine the depletion allowance for each year.
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