Answered: A-Determine the depreciation expense…

Name: Concord Company owns 9,000 acres of timberland purchased in 2009 at a
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Description: Concord Company owns 9,000 acres of timberland purchased in 2009 at a cost of $1,470 per acre. At the time of purchase, the land without the timber was valued at $420 per acre. In 2010, Concord built fire lanes and roads, with a life of 30 years, at

Business

Accounting

A-Determine the depreciation expense and the cost of timber sold related to depletion

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 7PB: Tree Lovers Inc. purchased 2,500 acres of woodland in which it intends to harvest the complete...

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Concord Timber Company owns 9,000 acres of timberland purchased in 2014 at a cost of $1.470 per acre. At the time of purchase. the land without the timber was valued at $420 per acre. In 2015, Concord built fire lanes and roads, with a life of 30 years, at a cost of $88.200. Every year, Concord sprays to prevent disease at a cost of $3,150 per year and spends $7,350 to maintain the fire lanes and roads. During 2016, Concord selectively logged and sold 735,000 board feet of timber, of the estimated 3,675,000 board feet. In 2017, Concord planted new seedlings to replace the trees cut at a cost of $105,000. Determine the depreciation expense and the cost of timber sold related to depletion for 2016. (b) Depreciation expense Cost of timber sold $ Cost of timber sold $ $ 2940 2,850,000 Concord has not logged since 2016. If Concord logged and sold 945,000 board feet of timber in 2027, when the timber cruise (appraiser) estimated 5,250,000 board feet, determine the cost of timber sold related…
Stanislaw Timber Company owns 9,000 acres of timberland purchased in 2009 at a cost of $1,400 per acre. At the time of purchase, the land without the timber was valued at $400 per acre. In 2010, Stanislaw built fire lanes and roads, with a life of 30 years, at a cost of $84,000. Every year, Stanislaw sprays to prevent disease at a cost of $3,000 per year and spends $7,000 to maintain the fire lanes and roads. During 2011, Stanislaw selectively logged and sold 700,000 board feet of timber, of the estimated 3,500,000 board feet. In 2012, Stanislaw planted new seedlings to replace the trees cut at a cost of $100,000. Instructions a. Determine the depreciation expense and the cost of timber sold related to depletion for 2011. b. Stanislaw has not logged since 2011. If Stanislaw logged and sold 900,000 board feet of timber in 2022, when the timber cruise (appraiser) estimated 5,000,000 board feet, determine the cost of timber sold related to depletion for 2022.
Wildhorse Timber Company owns 9,000 acres of timberland purchased in 2014 at a cost of $1,652 per acre. At the time of purchase, the land without the timber was valued at $472 per acre. In 2015, Wildhorse built fire lanes and roads, with a life of 30 years, at a cost of $99,120. Every year, Wildhorse sprays to prevent disease at a cost of $3,540 per year and spends $8,260 to maintain the fire lanes and roads. During 2016, Wildhorse selectively logged and sold 826,000 board feet of timber, of the estimated 4,130,000 board feet. In 2017, Wildhorse planted new seedlings to replace the trees cut at a cost of $118,000. (a) Your Answer Correct Answer (Used) Determine the depreciation expense and the cost of timber sold related to depletion for 2016. (b) Depreciation expense $ 3,304 Cost of timber sold $ 2,124,000 Your answer is incorrect. Wildhorse has not logged since 2016. If Wildhorse logged and sold 1,062,000 board feet of timber in 2027, when the timber cruise (appraiser) estimated…
Derringdo is a broadband provider which receives government assistance to provide broadband to remote areas. Derringdo invested in a new server at a gross cost of $800,000 on 1 October 20X2. The server has an estimated life of ten years with a residual value equal to 15% of its gross cost. Derringdo uses straight-line depreciation on a time apportioned basis. The company received a government grant of 30% of its cost price of the server at the time of purchase. The terms of the grant are that if the company retains the asset for four years or more, then no repayment liability will be incurred. Derringdo has no intention of disposing of the server within the first four years. Derringdo's accounting policy for capital-based government grants is to treat them as deferred credits and release them to income over the life of the asset to which they relate. What is the net amount that will be charged to operating expenses in respect of the server for the year ended 31 March 20X3? A $10,000 B…
Swifty Timber Company owns 9,000 acres of timberland purchased in 2014 at a cost of $1,442 per acre. At the time of purchase, the land without the timber was valued at $412 per acre. In 2015, Swifty built fire lanes and roads, with a life of 30 years, at a cost of $86,520. Every year, Swifty sprays to prevent disease at a cost of $3,090 per year and spends $7,210 to maintain the fire lanes and roads. During 2016, Swifty selectively logged and sold 721,000 board feet of timber, of the estimated 3,605,000 board feet. In 2017, Swifty planted new seedlings to replace the trees cut at a cost of $103,000. (a) Determine the depreciation expense and the cost of timber sold related to depletion for 2016. Depreciation expense Cost of timber sold $ GA $
Happy Timber, Inc. owns timberland that is used to supply firewood. The timberland was purchased for $480,000 of which $125,000 relates to the land itself, and it is expected to produce 1,000,000 total pieces of firewood over the next 5 years. If 75,000 pieces of firewood are cut and sold during the year, prepare the journal entries for the depletion and sale of the firewood. *Note: should have two iournal entries.
Tree Lovers Inc. purchased 100 acres of woodland in which the company intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $3,000,000 for the land. Tree Lovers will sell the lumber as it is harvested and expects to deplete it over five years (23 acres in year one, 30 acres in year two, 24 acres in year three, 10 acres in year four, and 13 acres in year five). Calculate the depletion expense for the next five years. Year 1 $ Year 2 Year 3 $ Year 4 Year 5 Prepare the journal entry for year one. If an amount box does not require an entry, leave it blank. %24 %24 %24 %24 %24
Thornton Moran manages the cutting department of Greene Vernon Company. He purchased a tree-cutting machine on January 1, year 2, for $510,000. The machine had an estimated useful life of 5 years and zero salvage value, and the cost to operate it is $101,000 per year. Technological developments resulted in the development of a more advanced machine available for purchase on January 1, year 3, that would allow a 30 percent reduction in operating costs. The new machine would cost $350,000 and have a 4-year useful life and zero salvage value. The current market value of the old machine on January 1, year 3, is $270,000, and its book value is $408,000 on that date. Straight-line depreciation is used for both machines. The company expects to generate $230,000 of revenue per year from the use of either machine. Required a. Recommend whether to replace the old machine on January 1, year 3. b. Prepare income statements for four years (year 3 through year 6) assuming that the old machine is…
(Depletion Computations—Timber) Stanislaw Timber Company owns 9,000 acres of timberland purchased in 2006 at a cost of $1,400 per acre. At the time of purchase, the land without the timber was valued at $400 per acre. In 2007, Stanislaw built fire lanes and roads, with a life of 30 years, at a cost of $84,000. Every year, Stanislaw sprays to prevent disease at a cost of $3,000 per year and spends $7,000 to maintain the fire lanes and roads. During 2008, Stanislaw selectively logged and sold 700,000 board feet of timber, of the estimated 3,500,000 board feet. In 2009, Stanislaw planted new seedlings to replace the trees cut at a cost of $100,000.Instructions(a) Determine the depreciation expense and the cost of timber sold related to depletion for 2008.(b) Stanislaw has not logged since 2008. If Stanislaw logged and sold 900,000 board feet of timber in 2019, when the timber cruise (appraiser) estimated 5,000,000 board feet, determine the cost of timber sold related to depletion for…
The chief ranger of the state's Department of Natural Resources is considering a new plan for fighting forest fires in the state's forest lands. The current plan uses eight fire-control stations, which are scattered throughout the Interior of the state forest. Each station has a four-person staff, whose annual compensation totals $250,000. Other costs of operating each base amount to $150,000 per year. The equipment at each base has a current salvage value of $170,000. The buildings at these interior stations have no other use. To demolish them would cost $15,000 each. The chief ranger is considering an alternative plan, which involves four fire-control stations located on the perimeter of the state forest. Each station would require a six-person staff, with annual compensation costs of $350,000. Other operating costs would be $160,000 per base. Building each perimeter station would cost $250,000. The perimeter bases would need helicopters and other equipment costing $550,000 per…
Baird Moran manages the cutting department of Greene Benson Company. He purchased a tree-cutting machine on January 1, Year 2, for $370,000. The machine had an estimated useful life of 5 years and zero salvage value, and the cost to operate it is $85,000 per year. Technological developments resulted in the development of a more advanced machine available for purchase on January 1, Year 3, that would allow a 20 percent reduction in operating costs. The new machine would cost $198,000 and have a 4-year useful life and zero salvage value. The current market value of the old machine on January 1, Year 3, Is $210,000, and Its book value is $296,000 on that date. Straight-line depreciation is used for both machines. The company expects to generate $240,000 of revenue per year from the use of elther machine. Required a. Recommend whether to replace the old machine on January 1, Year 3. b. Prepare Income statements for four years (Year 3 through Year 6) assuming that the old machine is…
Baird Moran manages the cutting department of Greene Benson Company. He purchased a tree-cutting machine on January 1, Year 2, for $370,000. The machine had an estimated useful life of 5 years and zero salvage value, and the cost to operate it is $85,000 per year. Technological developments resulted in the development of a more advanced machine available for purchase on January 1, Year 3, that would allow a 20 percent reduction in operating costs. The new machine would cost $198,000 and have a 4-year useful life and zero salvage value. The current market value of the old machine on January 1, Year 3, Is $210,000, and Its book value is $296,000 on that date. Straight-line depreciation is used for both machines. The company expects to generate $240,000 of revenue per year from the use of elther machine. Required a. Recommend whether to replace the old machine on January 1, Year 3. b. Prepare Income statements for four years (Year 3 through Year 6) assuming that the old machine c. Prepare…