At the beginning of 2018, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000.After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operationswere constructed and completed on March 30, 2018. The cost of the roads, which have no residual value and noalternative use after the tract is cleared, was $240,000. During 2018, Terra logged 500,000 of the estimated fivemillion board feet of timber.Required:Calculate the 2018 depletion of the timber tract and depreciation of the logging roads assuming the units-of-production method is used for both assets.
At the beginning of 2018, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000.After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operationswere constructed and completed on March 30, 2018. The cost of the roads, which have no residual value and noalternative use after the tract is cleared, was $240,000. During 2018, Terra logged 500,000 of the estimated fivemillion board feet of timber.Required:Calculate the 2018 depletion of the timber tract and depreciation of the logging roads assuming the units-of-production method is used for both assets.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 7EA: Alfredo Company purchased a new 3-D printer for $900,000. Although this printer is expected to last...
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At the beginning of 2018, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000.
After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operations
were constructed and completed on March 30, 2018. The cost of the roads, which have no residual value and no
alternative use after the tract is cleared, was $240,000. During 2018, Terra logged 500,000 of the estimated five
million board feet of timber.
Required:
Calculate the 2018 depletion of the timber tract and
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