On January 1, 2021, a business paid $6.400,000 for land with mineral deposits. Over the following six years, the company plans to mine 1,600,000 tonnes of ore. The corporation also spent $800,000 on mining equipment. The equipment has a residual value of $160,000 and a 10-year projected life, and it can be used in other mines. The company will have mined and sold 240,000 tonnes by the end of 2021. Depreciation on the equipment is estimated to be $96,000 [($800,000 $160,000) (240,000 tons/1,600,000 tonnes) by management. Which of the statements below is correct? Multiple Choice Management should depreciate the equipment evenly over six years.

On January 1, 2021, a business paid $6.400,000 for land with mineral deposits. Over the following six years, the company plans to mine 1,600,000 tonnes of ore. The corporation also spent $800,000 on mining equipment. The equipment has a residual value of $160,000 and a 10-year projected life, and it can be used in other mines. The company will have mined and sold 240,000 tonnes by the end of 2021. Depreciation on the equipment is estimated to be $96,000 [($800,000 $160,000) (240,000 tons/1,600,000 tonnes) by management. Which of the statements below is correct? Multiple Choice Management should depreciate the equipment evenly over six years.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 6PA: Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one...

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