FINANCIAL ACCT-CONNECT
8th Edition
ISBN: 9781266627903
Author: Wild
Publisher: INTER MCG
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Chapter 8, Problem 18E
Summary Introduction
Introduction: Depreciation refers to the allocation of cost on fixed assets for its useful life. Business allocates depreciation for tax and accounting purpose. Land fixed is not
To compute: Depreciationexpense for mining machinery. And prepare a
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Ex13: On April 2, 2017, G.O.A Mining Company pays $1,500,000 for an ore deposit
containing 800,000 tons. The company installs machinery in the mine costing $120,000,
with an estimated five-year life and no salvage value. The machinery will be
abandoned when the ore is completely mined. G.O.A begins mining on May 1, 2017,
and mines and sells 90,000 tons of ore during the remaining eight months of 2017.
Prepare the December 31, 2017, entries to record both the ore deposit depletion and
the mining machinery depreciation. Mining machinery depreciation should be in
proportion to the mine's depletion.
a) Depletion of mining company:
Date
Debit
Credit
b) Depreciation of machine:
Date
Debit
Credit
On April 2, 2015, Montana Mining Co. pays $4,170,260 for an ore deposit containing 1,438,000 tons. The company installs machinery in the mine costing $199,600, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Montana begins mining on May 1, 2015, and mines and sells 167,800 tons of ore during the remaining eight months of 2015.
Prepare the December 31, 2015, entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine’s depletion. (Do not round intermediate calculations. Round your final answers to the nearest whole number.)
1. Record the year-end adjusting entry for the depletion expense of ore mine.
2. Record the year-end adjusting entry for the depreciation expense of the mining machinery.
33. Frace company quarries limestone, crushes it and sells it to be used in road building. The entity paid P20,000,000 for a certain quarry. The property can be sold for P6,000,000 after production ceases.
Estimated tons of total reserves 20,000,000
Tons quarried through December 31, 2016 8,000,000
Tons quarried in 2017 3,000,000
An engineering study performed in 2017 indicated that on January 1, 2017, 15,000,000 tons of limestone were available. What amount of depletion should be recognized for 2017?
Chapter 8 Solutions
FINANCIAL ACCT-CONNECT
Ch. 8 - Prob. 1DQCh. 8 - Prob. 2DQCh. 8 - Prob. 3DQCh. 8 - Prob. 4DQCh. 8 - Prob. 5DQCh. 8 - Prob. 6DQCh. 8 - Prob. 7DQCh. 8 - Prob. 8DQCh. 8 - Identify events that might lead to disposal of a...Ch. 8 - Prob. 10DQ
Ch. 8 - Prob. 11DQCh. 8 - Prob. 12DQCh. 8 - Prob. 13DQCh. 8 - Prob. 14DQCh. 8 - Prob. 15DQCh. 8 - Prob. 16DQCh. 8 - Prob. 17DQCh. 8 - Prob. 18DQCh. 8 - Prob. 19DQCh. 8 - Prob. 20DQCh. 8 - Prob. 21DQCh. 8 - Prob. 1QSCh. 8 - Prob. 2QSCh. 8 - Straight-line depreciation P1 On January 2, 2016,...Ch. 8 - Prob. 4QSCh. 8 - Computing revised depreciation C2 On January 2,...Ch. 8 - Prob. 6QSCh. 8 - Prob. 7QSCh. 8 - Prob. 8QSCh. 8 - Prob. 9QSCh. 8 - Prob. 10QSCh. 8 - Identify the following assets a through i as...Ch. 8 - Prob. 12QSCh. 8 - Prob. 13QSCh. 8 - Caleb Co. owns a machine that costs $42,400 with...Ch. 8 - Prob. 15QSCh. 8 - Prob. 1ECh. 8 - Prob. 2ECh. 8 - Prob. 3ECh. 8 - Prob. 4ECh. 8 - Prob. 5ECh. 8 - Prob. 6ECh. 8 - Prob. 7ECh. 8 - Prob. 8ECh. 8 - Prob. 9ECh. 8 - Prob. 10ECh. 8 - Prob. 11ECh. 8 - Prob. 12ECh. 8 - Prob. 13ECh. 8 - Prob. 14ECh. 8 - Prob. 15ECh. 8 - Prob. 16ECh. 8 - Partial-year depreciation; disposal of plant asset...Ch. 8 - Prob. 18ECh. 8 - Prob. 19ECh. 8 - Prob. 20ECh. 8 - Prob. 21ECh. 8 - Prob. 22ECh. 8 - A Exchanging assets P5 Gilly Construction trades...Ch. 8 - Recording plant asset disposals P2 P5 On January...Ch. 8 - Prob. 25ECh. 8 - Plant asset costs; depreciation methods C1 P1...Ch. 8 - Prob. 2PSACh. 8 - Prob. 3PSACh. 8 - Prob. 4PSACh. 8 - Prob. 5PSACh. 8 - Onslow Co. purchases a used machine for $178,000...Ch. 8 - Prob. 7PSACh. 8 - Prob. 8PSACh. 8 - Prob. 1PSBCh. 8 - Prob. 2PSBCh. 8 - Asset cost allocation; straight-line depreciation...Ch. 8 - Computing and revising depreciation; revenue and...Ch. 8 - Computing and revising depreciation; selling plant...Ch. 8 - Prob. 6PSBCh. 8 - Prob. 7PSBCh. 8 - Prob. 8PSBCh. 8 - Prob. 8SPCh. 8 - Prob. 1BTNCh. 8 - Prob. 2BTNCh. 8 - Prob. 3BTNCh. 8 - Teams are to select an industry, and each team...Ch. 8 - Prob. 5BTNCh. 8 - Prob. 7BTNCh. 8 - Prob. 9BTN
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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.arrow_forwardExercise One On July 1, 2022, Phillips Inc. Invested $480,000 in a mine estimated to have 800,000 tonnes of ore. At the end of production at the mine, the company estimates it will have to spend $150,000 to restore the site to an environmentally acceptable condition. The property will then be sold for $90,000. During the last six months of 2022, 100,000 tonnes of ore were mined and sold. Amortizable Cost per Unit: Amount of Amortization Allocated: Amount to be allocated to the restoration liability: a) Prepare the journal entry to record the depletion expense. Date Particulars Debit Creditarrow_forward4 02:59:09 Perez Company acquires an ore mine at a cost of $2,240,000. It incurs additional costs of $627,200 to access the mine, which is estimated to hold 1,600,000 tons of ore. 210,000 tons of ore are mined and sold the first year. The estimated value of the land after the ore is removed is $320,000. Calculate the depletion expense from the information given. 1. & 2. Prepare the entry to record the cost of the ore mine and year-end adjusting entry. Complete this question by entering your answers in the tabs below. eBook Depletion Expense General Journal Calculate the depletion expense from the information given. Note: Round "Depletion per unit" to 3 decimal places. Cost Salvage Amount subject to depletion Total units of capacity Depletion per unit Units extracted and sold in period Depletion expense Help Save &arrow_forward
- 9. XYZ Company quarries limestone, crushes it, and sells it to be used in road building. XYZ paid P10,000,000 for a certain quarry. The property can be sold for P3,000,000 after production ceases. Estimated reserves 10,000,000; Tons quarried through December 31, 20X4 4,000,000; Tons quarried in 20X5 1,500,000. An engineering study performed in 20X5 indicated that as of January 1, 20X5, 7,500,000 tons of limestones were available. 30. Assume that the materials and labor cost incurred during 20X5 is 2,160,000 and that 1,000,000 tons were sold during the year at P5.00, Gross Profit for the year is?arrow_forwardces Montana Mining Company pays $4,834,810 for an ore deposit containing 1,554,000 tons. The company installs machinery in the mine costing $237,900. Both the ore and machinery will have no salvage value after the ore is completely mined. Montana mines and sells 187,200 tons of ore during the year. Prepare the December 31 year-end entries to record both the ore deposit depletion and the mining machinery depreciation Mining machinery depreciation should be in proportion to the mine's depletion. (Do not round intermediate calculations. Round your final answers to the nearest whole number.) View transaction list Journal entry worksheet 2 Record the year-end adjusting entry for the depletion expense of ore mine. Note: Enter debits before credits. Date General Journal December 31 Depletion expense-Mineral deposit Record entry Accumulated depletion-Mineral deposit Clear entry Debit Credit View general journalarrow_forwardNatural Resources SE7. Walden Green Company purchased land containing an estimated 4,000,000 tons of ore for $16,000,000. The land will be worth $2,400,000 without the ore after 8 years of active mining. Although the equipment needed for the mining will have a useful life of 20 years, it is not expected to be usable and will have no value after the mining on this site is complete. Compute the depletion charge per ton and the amount of deple- tion expense for the first year of operation, assuming that 600,000 tons of ore are mined and sold. Also, compute the first-year depreciation on the mining equipment using the production method, assuming a cost of $19,200,000 with no residual value.arrow_forward
- 12. On July 23 of the current year, Dakota Mining Company pays $7,398,720 for land estimated to contain 8,808,000 tons of recoverable ore. It installs and pays for machinery costing $968,880 on July 25. The company removes and sells 451,000 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined. Required:Prepare entries to record the following.(a) The purchase of the land.(b) The cost and installation of machinery.(c) The first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.(d) The first five months' depreciation on the machinery.arrow_forwardMontana Mining Company pays $4,771,370 for an ore deposit containing 1,502,000 tons. The company installs machinery in the mine costing $214,200. Both the ore and machinery will have no salvage value after the ore is completely mined. Montana mines and sells 150,100 tons of ore during the year. Prepare the December 31 year-end entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine's depletion. Note: Do not round intermediate calculations. Round your final answers to the nearest whole number. View transaction list Journal entry worksheet Credit View general Journalarrow_forwardMontana Mining Co. pays $3,721,000 for an ore deposit containing 1,525,000 tons. The company installs machinery in the mine costing $213,500. Both the ore and machinery will have no salvage value after the ore is completely mined. Montana mines and sells 166,200 tons of ore during the year. Prepare the yearend entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine’s depletion.arrow_forward
- Mark Company quarries limestone, crushes it and sells it to be used in road building. Mark paid P10,000,000 for a certain quarry. The property can be sold for P3,000,000 after production ceases. Estimated total reserves 10,000,000 Tons quarried through December 31, 2020 Tons quarried in 2021 4,000,000 1,500,000 An engineering study performed in 2021 indicated that on January 1, 2021, 7,500,000 tons of limestone were available. What is the depletion for 2021?arrow_forwardMontana Mining Company pays $3,234,950 for an ore deposit containing 1,553,000 tons. The company installs machinery in the mine costing $202,600. Both the ore and machinery will have no salvage value after the ore is completely mined. Montana mines and sells 167,100 tons of ore during the year. Prepare the December 31 year-end entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine's depletion. Note: Do not round intermediate calculations. Round your final answers to the nearest whole number. View transaction list Journal entry worksheet 1 2 Record the year-end adjusting entry for the depletion expense of ore mine. Note: Enter debits before credits. Date December 31 General Journal Debit Credit Record entry Clear entry View general journal Journal entry worksheet >arrow_forwardE10-10 On July 1, 2002, Phillips Inc. invested $480,000 in a mine estimated to have 800,000 tonnes of ore. At the end of production at the mine, the company estimates it will have to spend $150,000 to restore the site to an environmentally acceptable condition. The property will then be sold for $90,000. During the last six months of 2002, 100,000 tonnes of ore were mined and sold. Instructions (a) Prepare the journal entry to record the amortization expense. (b) Assume that 100,000 tonnes of ore were mined but only 80,000 were sold. How much amortiza- tion expense is recorded in 2002? How are the costs applied to the 20,000 unsold tonnes?arrow_forward
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