A drilling company purchased a mining site for $450,000 on July 1, 2016. The company expects to mine ore for the next 10 years and anticipates that a total of 80,000 tons will be recovered. During 2016, the company extracted 5,800 tons of ore. The depletion expense for the year 2016 is:

A drilling company purchased a mining site for $450,000 on July 1, 2016. The company expects to mine ore for the next 10 years and anticipates that a total of 80,000 tons will be recovered. During 2016, the company extracted 5,800 tons of ore. The depletion expense for the year 2016 is:

Name: A drilling company purchased a mining site for $450,000 on July 1, 201
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Description: A drilling company purchased a mining site for $450,000 on July 1, 2016. The company expects to mine ore for the next 10 years and anticipates that a total of 80,000 tons will be recovered. During 2016, the company extracted 5,800 tons of ore. The de

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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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.
Underwoods Miners recently purchased the rights to a diamond mine. It is estimated that there are two million tons of ore within the mine. Underwoods paid $46,000,000 for the rights and expects to harvest the ore over the next fifteen years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 900,000 tons Year 3: 400,000 tons Year 4: 210,000 tons Year 5: 150,000 tons Calculate the depletion expense for the next five years and create the journal entry for year one.
On April 17, 2016, the Loadstone Mining Company purchased the rights to a coal mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the coal totaled $4,500,000. The company expects to extract 900,000 tons of coal during a four-year period. During 2016, 240,000 tons were extracted and sold immediately. Required: 1. Calculate depletion for 2016. 2. Discuss the accounting treatment of the depletion calculated in requirement 1.
In 2017, Bodino Company paid P 4,000,000 to purchase land containing a total estimated 160,000 of extractable mineral deposits. The estimated value of the property after the mineral has been removed is P 800,000. Extraction activities began in 2018 and by the end of the year, 20,000 tons had been recovered and sold. In 2014, geological studies indicated that the total amount of mineral deposits had been underestimated by 60,000 tons. During 2019, 30,000tons were extracted, and 28,000 tons were sold. What is the depletion rate per ton in 2019? a. 12.73 c. 15.56 b. 14.00 d. 20.00
Raya's Mining Co purchased a mine for $8 million on July 1, 2014. The mine will generate an estimated 30 million tonnes of nickel. The mine has a residual value of $500 000, and the restoration cost at the end of the mine's useful life is estimated at $600 000. In the first year, 5 million tonnes of nickel were extracted. Prepare the journal entry to record the depletion expense for the first year, ended June 30, 2015.
On January 1,2015, GOGO Company purchased land with valuable natural ore deposits for $20,000,000. At that time, the estimated recoverable output from the mine is $4,000,000 metric tons of ore after which the land is expected to have residual value of $3,000,000. To facilitate the extraction and transportation of the ore, roads were constructed amounting to $1,500,000. In 2015, 2,000,000 metric tons were mined. At the end of 2016, a new estimate of remaining recoverable ore indicated 2,500,000 metric tons are available. During 2016, 1,500,000 metric tons were mined. How much is the depletion expense for the year 2016?
On April 17, 2021, the Loadstone Mining Company purchased the rights to a coal mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the coal totaled $3,840,000. The company expects to extract 960,000 tons of coal during a four-year period. During 2021, 320,000 tons were extracted and sold immediately. Calculate depletion for 2021.
In March, 2017, Mallory Mines Co. purchased a coal mine for $8,000,000. Removable coal is estimated at 1,500,000 tons. Mallory is required to restore the land at an estimated cost of $960,000. The company incurred $200,000 of development costs preparing the mine for production. During 2017, 360,000 tons were removed and sold. The total amount of depletion that Mallory should record for 2017 is Select one: a. $2,428,800. b. $2,198,400. • c. $1,619,200. d. $1,465,600.
On January 2, 2016, Dax Company purchased land for P450,000 from which it is estimated that 400,000 tons of ore could be extracted. It estimates that it will cost P80,000 to restore the land, after which it could be sold for P30,000.During 2016, the company mined 80,000 tons and sold 50,000 tons. During 2017, the company mined 100,000 tons and sold 120,000 tons. At the beginning of 2018 the company spent an additional P100,000, which increased the reserves by 60,000 tons. In 2018, the company mined 140,000 tons and sold 130,000 tons. The company uses a FIFO cost flow assumption. (Round depletion rate to two decimal places)(Note: There are 2 questions in this Problem: Depletion expense for 2017Depletion included in 2018 cost of sales) Depletion for 2017
On January 1,2015, CHING Company purchased land with valuable natural ore deposits for $20,000,000. At that time, the estimated recoverable output from the mine is $4,000,000 metric tons of ore after which the land is expected to have residual value of $3,000,000. To facilitate the extraction and transportation of the ore, roads were constructed amounting to $1,500,000. In 2015, 2,000,000 metric tons were mined. At the end of 2016, a new estimate of remaining recoverable ore indicated 2,500,000 metric tons are available. During 2016, 1,500,000 metric tons were mined. How much is the depletion expense for year 2015?
The Weber Company purchased a mining site for $1,750,000 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. The estimated residual value of the property is $150,000. During the first year, the company extracted 6,500 tons of ore. The depletion expense is $26,000 $15,000 $16,000 $17,500
one of the largest mining company, purchased 20 acres of land for P60,000,000 in 2010. The company expected to extract 5 million tons of mine from this land over the next 20 years at which time, residual value shall be P3,000,000. The following costs were also incurred related to the mining activities during 2010: Successful exploration cost, P5,000,000 and cost of P800,000 for dry wells. Operations started in the year 2011, during the first 2 years of the mine’s operations, 300,000 tons and 400,000 tons were mined and sold for P80 per ton.Required:a) Entries to record the purchase of the land and other costs related to the mining activities in the year 2010.b) Entries to record the depletion expense for the year 2011 and 2012.