Big Cat Exploration erected an oil platform in a remote area of Texas at a cost of $12 million. Bit Cat is legally required to dismantle and remove the platform at the end of its useful life, which is expected to be 10 years. Big Cat estimates that the cost of dismantling and removing the oil rig will be $600,000. Assume that the appropriate discount rate is 8%. Required:   Prepare the journal entry to record the acquisition of the oil platform.

Q: Burn Incorporated purchased a $510,000 machine to manufacture a specialty tap for electrical…

A: Solution:   Net present value of the proposed investment is computed using formula = PV of cash…

Q: Your client, Hazelton Mining, recently entered into an agreement to obtain the rights to operate a…

A: Accretion  The gradual growth of assets and revenues as a result of industry expansion, internal…

Q: Your client, Hazelton Mining, recently entered into an agreement to obtain the rights to operate a…

A: A journal entry is a form of accounting entry that is used to report a business transaction in a…

Q: e Fairy Company purchased a site for limestone quarry for P 100,000 on January 2,2020. It estimates…

A: a) The depletion cost per ton.   Cost of quarry = P100,000 Asset retirement obligation value =…

Q: Goodson Healthcare purchased a new sonogram imaging unit for $300,000 and a truck body and chassis…

A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: A highway construction firm purchased a particular earthmoving machine 3 years ago for $125,000. The…

A: The annual cash flows of existing method are as follows: Resultant table:

Q: Goodson Healthcare purchased a new sonogram imaging unit for $300,000 and a truck body and chassis…

A: Answer a) Calculation of Salvage Value Salvage Value = (Purchase price of Imaging Unit + Purchase…

Q: Sandhill Inc. wants to purchase a new machine for $37,840, excluding $1,300 of installation costs.…

A: Before investing in new projects or assets, profitability of the project is evaluated by using…

Q: Tuft Hardware Consultants purchased a building for $704,000 and depreciated it on a straight-line…

A: Depreciation expense is the outlay which is reported in the income statement. It is the non-cash…

Q: Tamarisk Corporation acquires a coal mine at a cost of $464,000. Intangible development costs total…

A: Depletion expense = (Cost - Salvage value) * coal extracted / Total coal estimated to be available =…

Q: Bowman Corporation is considering an investment in special-purpose equipment to enable the company…

A: The payback period is the total number of years required to recover the cost of an investment. The…

Q: You have been asked by the president of your company to evaluate the proposed acquisition of a new…

A: PV of cash inflows= Annual cash flows*Present value annuity factor+Salvage value after tax* Present…

Q: Pina Colada Corporation acquires a coal mine at a cost of $ 863,800. Intangible development costs…

A: Solution:- Calculation of Depletion note per ton as follows;- =($863,800+$221,000+$93,000-$120,000)…

Q: Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value…

A: Depreciation expense under the straight-line method is computed by: = (Historical Cost - Salvage…

Q: rm in a remote area of Texas at a cost of $10 million. Bit Cat is legally required to dismantle and…

A: Pv factor @ 8% for 10th year is 0.463193.

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: Alcide Mining Company purchased land on February 1, 2020, at a cost of $1,190,000. It estimated that…

A: a. Compute the per unit material cost.

Q: Nash Mining Company purchased land on February 1, 2020, at a cost of $ 914,300. It estimated that a…

A:

Q: Please answer questions 1-7 based on the following information: • You have been asked by the…

A: Here, Initial Investment is $40,000 Modification Cost is $5,000 Salvage Value is $6000 Depreciation…

Q: On January 1, 2014, Peter Company purchased an oil tanker depot at a cost of 8,000,000.  The entity…

A: Answer - Working Note :  Calculation of amount of gain or loss to be included in the Income…

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: On January 1,2020 Petron Company purchased an oil tanker depot at the cost of P 7,000,000 the entity…

A: Journal in accounting and book keeping is a book of records. It is used to record every monetary…

Q: quired a patent from Generics Research Corporation for $3 million. The legal life of the patent is…

A: Amortization costs are the costs of long-term assets (such as computers and automobiles) over the…

Q: Your client, Hazelton Mining, recently entered into an agreement to obtain the rights to operate a…

A: Disclaimer: Since it is a multipart question, we are able to give answers to the first 3 parts. If…

Q: You have been asked by the president of your company to evaluate the proposed acquisition of a new…

A: Initial Investment The initial investment means cost of purchase plus  working capital required.…

Q: On January, 2023, Big Company purchased a mineral mine for P2,640,000 with removable ore estimated…

A: Depletion expenses: Depletion expenses is the reduction in the profit due to the use of natural…

Q: Billings Corporation acquires a coal mine at a cost of $2,000,000. Intangible development costs…

A: Depletion cost per ton = (Cost of the Coal mine - Residual value) / Estimated quantity of coal…

Q: J. F. Manning Metal Company is considering the purchase of a new millingmachine during year 0. The…

A: A ) Project cash flow in actual dollars: Working:

Q: A civil engineer who owns his own design/build/operate company purchased a small crane 3 years ago…

A: Replacement analysis is the process by which the various costs consequences involved are studied so…

Q: Dell is considering replacing one of its material handling systems. The old system was purchased 7…

A: a.Calculation of cash flow of both alternatives using cash flow approach (insider’s viewpoint…

Q: Your client, Hazelton Mining, recently entered into an agreement to obtain the rights to operate a…

A: Introduction:- Hazelton Mining has agreed to pay $15 million for the rights to operate a coal mine…

Q: our client, Hazelton Mining, recently entered into an agreement to obtain the rights to operate a…

A: Journal entries form the basis for other accounting tasks such as ledger account preparation, trial…

Q: Crane Corporation acquires a coal mine at a cost of $404,000. Intangible development costs total…

A: The question is based on the concept of Journal Entry.

Q: Your client, Hazelton Mining, recently entered Into an agreement to obtain the rights to operate a…

A: Working note:

Q: Lifeline Biofuels built an oil rig at a cost of $4.5 million that it places into service on the…

A: Accretion Expense: In accounting, accrual is the periodic acknowledgment of an expenditure that is…

Q: Frank acquires a coal mine at a cost of 400,000. Intangible development costs total 100,000. After…

A: Depreciable cost= [Purchase cost + Development cost + Fair value obligation - sale value] / Number…

Q: Colquhoun International purchases a warehouse for $300,000. The best estimate of the salvage value…

A: Depreciation can be defined as fall in the asset’s historical value each year. Depreciable amount is…

Q: . Calculate annual depreciation expense for the first four years. $fill in the blank…

A:

Q: Goodson Healthcare purchased a new sonogram imaging unit for $300,000 and a truck body and chassis…

A: Depreciation is a reduction in the value of assets due to the usage of that asset. We can evaluate…

Q: Headland Mining Company purchased land on February 1, 2020, at a cost of $939,500. It estimated that…

A: Total cost of land = Cost of land+Restoration obligation+Development cost-Resale value of the…

Q: Everly Corporation acquires a coal mine at a cost of $400,000. Intangible development costs total…

A: Depletion: Depletion is a process in which the cost of natural resources like oil reserves, mineral…

Q: Tamarisk Mining Company purchased land on February 1, 2020, at a cost of $945,100. It estimated that…

A: We have the following information: Tamarisk Mining Company purchased land on February 1, 2020, at a…

Q: The Darlington Equipment Company purchased a machine 5 years ago, prior to the TCJA, at a cost of…

A: The question is related to Capital Budgeting amd the problem is of replacement decision.

Q: In 2021, the Marion Company purchased land containing a mineral mine for $1,800,00O. Additional…

A: Depreciation of asset=Cost of asset-Residual valueTotal estimated tons×Tons extracted Book value of…

Q: A civil engineer who owns his own design/build/operate company purchased a small crane 3 years go at…

A: Replacement analysis: It is the decision related to the replacement or sale of an existing asset to…

Q: Tamarisk Mining Company purchased land on February 1, 2020, at a cost of $ 914,300. It estimated…

A: Cost Per Unit: It is calculated by taking into account two elements - variable cost and fixed cost -…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.