On April 17, 2021, the Loadstone Mining Company purchased the rights to a coal mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the coal totaled $3,840,000. The company expects to extract 960,000 tons of coal during a four-year period. During 2021, 320,000 tons were extracted and sold immediately. Calculate depletion for 2021.
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A: The depletion expense refers to the decrease in the value of the natural resource used in the…
Q: 6. On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which…
A: Depletion is charged in books in order to record reduction in value of natural resources over the…
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A: Depletion is an accounting concept used by the timber, oil and gas and mining industries to account…
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A: Depletion refers to the measure which is linked with the depletion amount of the extraction of the…
Q: On July 1, 2021, Lambda Company, a calendar year entity purchased the rights to a mine. The total…
A: Cost of right = P14,000,000 - P2,000,000 = P12,000,000 Reserves used during the year = 25,000 tons x…
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 June 1, 2021, ABC Company purchased rights to a mine for P30,000,000, of which, P3,000,000 was…
A: Cost of mine = Total purchase value - Amount allocable to land = 30000000 - 3000000 = 27,000,000
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A: The depletion expense is charged on minerals with extraction and minerals sold during the period.
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A: Depreciation is charged to record reduction in value of asset over the period of time.
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A: Depletion expense allows an owner or the extractor to charge the cost of reserves on the basis of…
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A: ANSWER 1)Purchase date of Equipment =January 2,2021 Estimated life of equipment=8 Estimated residual…
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…
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A: Depletion base includes Purchase cost development cost PV of anticipated restoration cost less:…
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A: Annual depreciation= (cost of the assets - residual value) / life of the assets = (P1,500,000-0) /…
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A: 1) Calculation of Depletion cost per Ton:
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A: Natural resources are gifts of nature without which survival is impossible. In order to fulfill the…
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A: Depletion cost is charged on to the extractable resources and not to land or equipment, thus only…
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A: Every natural resource will lose out its value over the period of time. Depletion is being charged…
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A: SOLUTION- DEPLETION IS A METHOD FOR ALLOCATING THE EXPENSE OF HARVESTING NATURAL PRODUCTS FROM EARTH…
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A: Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…
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Q: On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000…
A: Answer 1) Given: Depletion base =₱13,200,000-₱1,200,000=₱12000000Salvage value =0
Q: On January 1, 2018, Spring Co. purchased a land for $12,000,000. The company expected to extract…
A:
Q: In January, 2020, Swifty Corporation purchased a mineral mine for $4800000 with removable ore…
A: The company will use the assets for many years. Since the assets are used for many years in the…
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A: Depletion Expense: The cost allocation method used for natural resources like mining deposits,…
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A: Depletion: It refers to the process of proportionately distributing the cost of the extracting…
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Q: 7. On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which…
A: Depreciation is charged to record reduction in value of asset over the period of time.
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A: Hi student Since there are multiple sub parts, we will answer only first three sub parts.
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On April 17, 2021, the Loadstone Mining Company purchased the rights to a coal mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the coal totaled $3,840,000. The company expects to extract 960,000 tons of coal during a four-year period. During 2021, 320,000 tons were extracted and sold immediately.
Calculate depletion for 2021.
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- 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 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?
- 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.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.On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.
- 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.A machine costing 350,000 has a salvage value of 15,000 and an estimated life of three years. Prepare depreciation schedules reporting the depreciation expense, accumulated depreciation, and book value of the machine for each year under the double-declining-balance and sum-of-the-years-digits methods. For the double-declining-balance method, round the depreciation rate to two decimal places.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.
- Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value at the time of purchase was $15,000, and it is expected to be used for twenty-five years. Colquhoun uses the straight-line depreciation method for all warehouse buildings. After four years of recording depreciation, Colquhoun determines that the warehouse will be useful for only another fifteen years. Calculate annual depreciation expense for the first four years. Determine the depreciation expense for the final fifteen years of the assets life, and create the journal entry for year five.Comprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar Corporation purchased a machine for 50,000. Lapar paid shipping expenses of 500, as well as installation costs of 1,200. The company estimated that the machine would have a useful life of 10 years and a residual value of 3,000. On January 1, 2020, Lapar made additions costing 3,600 to the machine in order to comply with pollution-control ordinances. These additions neither prolonged the life of the machine nor increased the residual value. Required: 1. If Lapar records depreciation expense under the straight-line method, how much is the depreciation expense for 2020? 2. Assume Lapar determines the machine has three significant components as shown below. If Lapar uses IFRS, what is the amount of depreciation expense that would be recorded?Dunedin Drilling Company recently acquired a new machine at a cost of 350,000. The machine has an estimated useful life of four years or 100,000 hours, and a salvage value of 30,000. This machine will be used 30,000 hours during Year 1, 20,000 hours in Year 2, 40,000 hours in Year 3, and 10,000 hours in Year 4. With DEPREC5 still on the screen, click the Chart sheet tab. This chart shows the accumulated depreciation under all three depreciation methods. Identify below the depreciation method that each represents. Series 1 _____________________ Series 2 _____________________ Series 3 _____________________ When the assignment is complete, close the file without saving it again. Worksheet. The problem thus far has assumed that assets are depreciated a full year in the year acquired. Normally, depreciation begins in the month acquired. For example, an asset acquired at the beginning of April is depreciated for only nine months in the year of acquisition. Modify the DEPREC2 worksheet to include the month of acquisition as an additional item of input. To demonstrate proper handling of this factor on the depreciation schedule, modify the formulas for the first two years. Some of the formulas may not actually need to be revised. Do not modify the formulas for Years 3 through 8 and ignore the numbers shown in those years. Some will be incorrect as will be some of the totals. Preview the printout to make sure that the worksheet will print neatly on one page, and then print the worksheet. Save the completed file as DEPRECT. Hint: Insert the month in row 6 of the Data Section specifying the month by a number (e.g., April is the fourth month of the year). Redo the formulas for Years 1 and 2. For the units of production method, assume no change in the estimated hours for both years. Chart. Using the DEPREC5 file, prepare a line chart or XY chart that plots annual depreciation expense under all three depreciation methods. No Chart Data Table is needed; use the range B29 to E36 on the worksheet as a basis for preparing the chart if you prepare an XY chart. Use C29 to E36 if you prepare a line chart. Enter your name somewhere on the chart. Save the file again as DEPREC5. Print the chart.