Depletion 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 the nearest dollar. 1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021.
Depletion 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 the nearest dollar. 1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 13P
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Depletion
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 the nearest dollar.
1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021.
| 2019 | Depletion deducted from income | $fill in the blank ed708e053f9005b_1 | |
| Depletion included in inventory | $fill in the blank ed708e053f9005b_2 | ||
| 2020 | Depletion deducted from income | $fill in the blank ed708e053f9005b_3 | |
| Depletion included in inventory | $fill in the blank ed708e053f9005b_4 | ||
| 2021 | Depletion deducted from income | $fill in the blank ed708e053f9005b_5 | |
| Depletion included in inventory | $fill in the blank ed708e053f9005b_6 |
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 | $fill in the blank 0e835602701403c_1 | |
| Less: Accumulated depletion | fill in the blank 0e835602701403c_2 | |
| $fill in the blank 0e835602701403c_3 | ||
| December 31, 2020 | ||
| Mineral ore resources | $fill in the blank 0e835602701403c_4 | |
| Less: Accumulated depletion | fill in the blank 0e835602701403c_5 | |
| $fill in the blank 0e835602701403c_6 | ||
| December 31, 2021 | ||
| Mineral ore resources | $fill in the blank 0e835602701403c_7 | |
| Less: Accumulated depletion | fill in the blank 0e835602701403c_8 | |
| $fill in the blank 0e835602701403c_9 |
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 | $fill in the blank b0841d021fa202d_1 |
| December 31, 2020 | $fill in the blank b0841d021fa202d_2 |
| December 31, 2021 | $fill in the blank b0841d021fa202d_3 |
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