Early in the current year, Tokay Co. purchased the Silverton Mine at a cost of $20,000,000. The mine was estimated to contain 200,000 tons of ore and to have a residual value of $5,000,000 after mining operations are completed. During the year, 105,000 tons of ore were removed from the mine. In this situation: a) The amount of depletion charged to expenses from during 2020 is? b) The Net Book Value of the mine at the end of 2020 is? c) The inventory value of the extracted carats of ore?
Q: Sergei Company purchases land for $4,000,000 from which it expects to extract 2,000,000 tons of…
A: Given that, Cost of land = $4,000,000 Estimated residual value = $400,000 Expected extract tons of…
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: At the beginning of the current year, Bert Company purchased a mineral mine for P26,400,000 with…
A: GIVEN At the beginning of the current year, Bert Company purchased a mineral mine for P26,400,000…
Q: n 2018, IRIS Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons of…
A: Given information: Purchase price = ₱4,000,000 Total estimated tons = 160,000 Salvage value =…
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: in 2020, ABC Company paid P4,000,000 to purchase land containing a total estimated 160,000 tons of…
A: Depletion refers to the allocation or expense of extracting natural resources from the surface of…
Q: In January 2019, Straw Corporation purchased a mineral mine for P9,800,000 with removable ore…
A: Depletion expense is the exploration cost and the development cost charged to the income statement.…
Q: In January, 2020, Waterway Industries purchased a mineral mine for $4800000 with removable ore…
A: Given that: Purchase price of Mine = $48,00,000 Total tons = 20,00,000 Residual value = $280,000…
Q: On January 1, 2020, Sapphire Mining Company purchased land with valuable natural ore deposits for…
A: The depletion expense refers to the decrease in the value of the natural resource used in the…
Q: At the beginning of the current year, Bert Company purchased a mineral mine for P26,400,000 with…
A: Lets understand the basics. Depletion needs to calculate when there is extraction of mineral…
Q: In January 2019, Straw Corporation purchased a mineral mine for P9,800,000 with removable ore…
A: Depletion is an accounting concept used by the timber, oil and gas and mining industries to account…
Q: On January 2, 2019, Whistler Company purchased land for $480,000, from which it is estimated that…
A: Depletion refers to the measure which is linked with the depletion amount of the extraction of the…
Q: In 2020, Tableta Company paid P4,000,000 to purchase a land containing a total estimated 160,000…
A: Under straight line method, Depreciation expense for equipment can be calculated as: = (Cost -…
Q: On July 4, 2020, ZY Company purchased the mineral rights to a granite deposit for 2,400,000. It is…
A: The depletion expense is charged on minerals with extraction and minerals sold during the period.
Q: On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000…
A: Depreciation is charged to record reduction in value of asset over the period of time.
Q: In January, 2004, Nixon Corporation purchased a mineral mine for P6,800,000 with removable ore…
A: Depletion Expense: Depletion expense is determined to record the exhaustion of natural resources. It…
Q: On January 2, 2018, ABC Company purchased land for ₱450,000, from which it estimated that 400,000…
A: Cost of Sales : It is the amount of cost that made the goods available for sale which typically will…
Q: On January 2, 2019, Whistler Company purchased land for $450,000, from which it is estimated that…
A: 1) Calculation of Depletion cost per Ton:
Q: In 2017, a company acquired a silver mine for P50,000. In 2018, the company constructed a road to…
A: A slow decrease of the asset value which is tangible is depreciation and depletion is such decrease…
Q: On January 2, 2019, Whistler Company purchased land for $450,000, from which it is estimated that…
A: Depletion in accounting refers to the technique used in allocating or assigning the cost of…
Q: Sunny Company paid 4,000,000 for property containing natural resources of 2,500,000 tons of ore. The…
A: Natural resources are gifts of nature without which survival is impossible. In order to fulfill the…
Q: On July 4, 2020, Wyoming Mining Company purchased the mineral rights to a granite deposit for…
A: Assets used over the years will face a depreciation each year which refers to the reduction in the…
Q: Pears Company purchased a new machine on January 1 of this year for an amount of P90,000, with an…
A: At the end of the year Cash inflow Salvage value Cumulative payback 1 P36,000 P20,000 P56,000 2…
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: eight years. However, after all the resources are removed, the equipment will be of no use and will…
A: Depreciatioin is charged to record reductiion in value of asset over the period of time.…
Q: houses and other fixed installations are constructed at a cost of P8,000,000 and such expenditures…
A: Every natural resource will lose out its value over the period of time. Depletion is being charged…
Q: In 20x1, Newman Company paid P1,000,000 to purchase land containing a total estimated 160,000 tons…
A: Solution: Total cost of land= P1,000,000. Estimated value after mineral have been removed= P200,000…
Q: On January 2, 2018, ABC Company purchased land for ₱450,000, from which it estimated that 400,000…
A: SOLUTION- DEPLETION IS A METHOD FOR ALLOCATING THE EXPENSE OF HARVESTING NATURAL PRODUCTS FROM EARTH…
Q: On December 31, 2020, a company invested $2,150,000 in an asset. The company estimates that…
A: A journal entry is a form of accounting entry that is used to report a business transaction in a…
Q: On January 1, 2015, a corporation purchased a factory for P3,600,000 and machinery for P5,000,000.…
A:
Q: In 2018, the Marion Company purchased land containing a mineral mine for $1,600,000. Additional…
A: 1. Compute depletion and depreciation of the mine and the mining facilities and equipment for 2018…
Q: In 2018, IRIS Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons of…
A: Given information: Cost = ₱4,000,000 Residual value = ₱800,000 Expected tons to be extracted =…
Q: On July 1,2021, Phantom Corporation purchased the rights to a mine for a total purchase price of…
A: Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…
Q: On January 1, 2019, Blossom Corporation acquired a small mine for $20 million along with equipment…
A: Depreciation is the reduction in the worth of fixed tangible asset due to obsolescence or over-use…
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: On January 1, 2018, Spring Co. purchased a land for $12,000,000. The company expected to extract…
A:
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: On January 1, 2022, the Vallahara Company purchased machinery for P 650,000 which it installed in a…
A: Given, Purchase price of machine = P 650,000
Q: On January 1, 2022, the Vallahara Company purchased machinery for P 650,000 which it installed in a…
A: Impairment is a term used in accounting to characterize a lasting decrease in the value of a…
Q: On January 2, 2019, Whistler Company purchased land for $450,000, from which it is estimated that…
A: The process by which financial transactions of the business are recorded and communicated with the…
Q: At the beginning of Year 1, Ithaca Incorporated purchased land for $1,500,000 from which it expects…
A: Depletion is the process by which the cost of natural resources such as oil reserves, mineral…
Q: Required: 1. Prepare schedules to determine whether, at the end of 2019, the machinery is impaired…
A: Requirement 1:
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: In January, 2004, Nixon Corporation purchased a mineral mine for P6,800,000 with removable ore…
A: The depletion expense is charged on mines on the basis of units of mines extracted.
Q: Sergei Company purchases land for $4,000,000 from which it expects to extract 2,000,000 tons of…
A: Introduction: Depletion: Decreasing value of assets over its useful life period called as Depletion.…
Q: On January 2, 2018, ABC Company purchased land for ₱450,000, from which it estimated that 400,000…
A: When fixed assets are purchased, they will be recorded at their purchase cost. When they are put…
Q: During 2021, Bondoc Corporation acquired a mineral mine for P900,000 of which P150,000 was ascribed…
A: Depletion of mine will be on the basis of amount of mineral extracted during the period. Accumulated…
Q: On January 2, 2019, Whistler Company purchased land for $450,000, from which it is estimated that…
A: Depletion is like depreciation. It is used in mines. Here Whistler company has purchased a mine at…
Q: In January 2020, Fritz Mining Corporation purchased a mineral mine for $6,300,000 with removable ore…
A: Calculate the depletion cost per unit as follows: Depletion cost per unit = (Purchase cost - Ore…
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…
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- On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.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.
- 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?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.Underwoods Miners recently purchased the rights to a diamond mine. It is estimated that there are two million tons of ore within the mine. Underwoods paid $46,000,000 for the rights and expects to harvest the ore over the next fifteen years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 900,000 tons Year 3: 400,000 tons Year 4: 210,000 tons Year 5: 150,000 tons Calculate the depletion expense for the next five years and create the journal entry for year one.
- 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.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 the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.The following intangible assets were purchased by Hanna Unlimited: A. A patent with a remaining legal life of twelve years is bought, and Hanna expects to be able to use it for six years. It is purchased at a cost of $48,000. B. A copyright with a remaining life of thirty years is purchased, and Hanna expects to be able to use it for ten years. It is purchased for $70,000. Determine the annual amortization amount for each intangible asset.
- Kam Company purchased a machine on January 2, 2019, for 20,000. The machine had an expected life of 8 years and a residual value of 300. The double-declining-balance method of depreciation is used. Required: 1. Compute the depreciation expense for each year of the assets life and book value at the end of each year. 2. Assuming that the company has a policy of always changing to the straight-line method at the midpoint of the assets life, compute the depreciation expense for each year of the assets life. 3. Assuming that the company always changes to the straight-line method at the beginning of the year when the annual straight-line amount exceeds the double-declining-balance amount, compute the depreciation expense for each year of the assets life.Tree Lovers Inc. purchased 2,500 acres of woodland in which it intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $5,000,000 for the land. Tree Lovers will sell the lumber as it is harvested and it expects to deplete it over ten years (150 acres in year one, 300 acres in year two, 250 acres in year three, 150 acres in year four, and 100 acres in year five). Calculate the depletion expense for the next five years and create the journal entry for year one.On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was estimated at 2,000. The equipment will be depreciated over 10 years using the double-declining balance method. Counting the year of acquisition as one-half year, Mundo should record 2019 depredation expense of: a. 7,680 b. 9,000 c. 9,600 d. 10,000