E10-10 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?

E10-10 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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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