Answered: Hidden Hollow Mining Co. acquired…

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 6PB: Underwoods Miners recently purchased the rights to a diamond mine. It is estimated that there are...

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Depletion

Hidden Hollow Mining Co. acquired mineral rights for $69,000,000. The mineral deposit is estimated at 60,000,000 tons. During the current year, 13,200,000 tons were mined and sold.

a. Determine the depletion rate. If required, round your answer to two decimal places.
$fill in the blank d39a0a00ffc1f93_1 per ton

b. Determine the amount of depletion expense for the current year.
$fill in the blank d39a0a00ffc1f93_2

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Similar to the units-of-production method to depreciate a fixed asset, the depletion rate that is calculated stays constant no matter how much of the natural resource is extracted.

c. Journalize the adjusting entry on December 31 to recognize the depletion expense. If an amount box does not require an entry, leave it blank.

Dec. 31	Depletion Expense	fill in the blank 1c7c11ffcfaff92_2	fill in the blank 1c7c11ffcfaff92_3
	Accumulated Depletion	fill in the blank 1c7c11ffcfaff92_5	fill in the blank 1c7c11ffcfaff92_6

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