
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Marigold Paper Products purchased 10,400 acres of forested timberland in March 2025. The company paid $1,768 per acre for this
land, which was above the $832 per acre most farmers were paying for cleared land. During April, May, June, and July 2025, Marigold
cut enough timber to build roads using moveable equipment purchased on April 1, 2025. The cost of the roads was $260,600, and the
cost of the equipment was $234,000; this equipment was expected to have a $9,360 salvage value and would be used for the
next 15 years. Marigold selected the straight-line method of depreciation for the moveable equipment. Marigold began actively
harvesting timber in August and by December had harvested and sold 561,600 board feet of timber of the estimated 7,020,000 board
feet available for cutting.
In March 2026, Marigold planted new seedlings in the area harvested during the winter. Cost of planting these seedlings was
$125,100. In addition, Marigold spent $8,320 in road maintenance and $6,240 for pest spraying during calendar-year 2026. The road
maintenance and spraying are annual costs. During 2026, Marigold harvested and sold 804,960 board feet of timber of the
estimated 6,708,000 board feet available for cutting.
In March 2027, Marigold again planted new seedlings at a cost of $156,000, and also spent $15,600 on road maintenance and pest
spraying. During 2027, the company harvested and sold 676,000 board feet of timber of the estimated 6,760,000 board feet available
for cutting.
Compute the amount of depreciation and depletion expense for each of the 3 years (2025, 2026, and 2027). Assume that the roads are
usable only for logging and therefore are included in the depletion base. (Round times cost per board foot to 2 decimal places eg. 2.55 and
final answers to O decimal places, e.g. 45,892.)
Depletion expense
Depreciation expense
$
$
2025
$
$
2026
$
$
2027
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