Work Chap h value 3.00 points At the beginning of 2016, Terra Lumber Company pur

Question

Work Chap h value 3.00 points At the beginning of 2016, Terra Lumber Company purchased a timber tract from Boise Cantor for 4,230,000. After the timber is cleared, the land will have a residual value of $690,000. Roads to enable logging operations were constructed and completed on March 30, 2016. The cost of the roads, which have no residual value and no altemative use after the tract is cleared, was $354,000. During 2016, Terra logged 590,000 of the estimated 5.9 million board feet of timbr. Required: production method is used for both assets. (Do not round intermediate calculations.) of the logging roads assuming the units-of- Depletion of the timber tract Depreciation of the logging roads Hints References eBook& Resources Hint#1 ) Type here to search

Explanation / Answer

Depletion of the timber tract = [($4,230,000 - $690,000) / 5,900,000] × 590,000 = $354,000

Depreciation of the logging roads = [($354,000 - $0) / 5,900,000] × 590,000 = $35,400

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