Exercise 11-19 Metlock Company owns 9,000 acres of timberland purchased in 2006

Question

Exercise 11-19 Metlock Company owns 9,000 acres of timberland purchased in 2006 at a cost of $1,414 per acre. At the time of purchase, the land without the timber was valued at $404 per acre. In 2007, Metlock built fire lanes and roads, with a life of 30 years, at a cost of $84,840. Every year, Metlock sprays to prevent disease at a cost of $3,030 per year and spends $7,070 to maintain the fire lanes and roads. During 2008, Metlock selectively logged and sold 707,000 board feet of timber, of the estimated 3,535,000 board feet. In 2009, Metlock planted new seedlings to replace the trees cut at a cost of $101,000. Determine the depreciation expense and the cost of timber sold related to depletion for 2008. (Round intermediate calculations to 5 decimal places, e.g. 1.54687 and final answers to 0 decimal places, e.g. 5,125.) Depreciation expense $ Cost of timber sold $ Metlock has not logged since 2008. If Metlock logged and sold 909,000 board feet of timber in 2019, when the timber cruise (appraiser) estimated 5,050,000 board feet, determine the cost of timber sold related to depletion for 2019. (Round intermediate calculations to 5 decimal places, e.g. 1.54687 and final answers to 0 decimal places, e.g. 5,125.) Cost of timber sold $

Explanation / Answer

Depreciation expense=$84,840/30

=$2,828 per year

Depreciation expense for 2019=$2,228

Cost of timber Sold for 2019:

= (Cost per acre -land value per acre)×acre

=($14,14-$404)×9000

=$1,010×9000

=$ 90,90,000

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