On January 2, 2019, Whistler Company purchased land for $450,000, 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 $80,000, after which it could be sold for $30,000. During 2019, Whistler mined 80,000 tons and sold 50,000 tons. During 3020, Whistler mined 100,000 tons and sold 120,000 tons. At the beginning of 2021, Whistler spent an additional $100,000, which increased the reserves by 60,000 tons. In 2021, Whistler mined 140,000 tons and sold 130,000 tons. Whistler uses a FIFO cost flow assumption. Required: 1. Calculate the depletion included in the income statement an ending inventory for 2019, 2020, and 2021. Round the depletion rate to 2 decimal places.2. Prepare the natural resources section of the balance sheet on December 31, 2019, 2020, and 2021, assuming that an accumulated depletion account is used. 3.Assume Whistler's discount rate was 8%. What is the balance in the asset retirement obligation at 2019, 2020, and 2021?
On January 2, 2019, Whistler Company purchased land for $450,000, 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 $80,000, after which it could be sold for $30,000.
During 2019, Whistler mined 80,000 tons and sold 50,000 tons. During 3020, Whistler mined 100,000 tons and sold 120,000 tons. At the beginning of 2021, Whistler spent an additional $100,000, which increased the reserves by 60,000 tons. In 2021, Whistler mined 140,000 tons and sold 130,000 tons. Whistler uses a FIFO cost flow assumption.
Required:
1. Calculate the depletion included in the income statement an ending inventory for 2019, 2020, and 2021. Round the depletion rate to 2 decimal places.
2. Prepare the natural resources section of the balance sheet on December 31, 2019, 2020, and 2021, assuming that an accumulated depletion account is used.
3.Assume Whistler's discount rate was 8%. What is the balance in the asset retirement obligation at 2019, 2020, and 2021?
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