At the beginning of 2014, Aristotle Company acquired a mine for $952,680. Of thi

Question

At the beginning of 2014, Aristotle Company acquired a mine for $952,680. Of this amount, $109,200 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 11,920,000 units of the ore appear to be in the mine. Aristotle incurred $185,640 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $43,680. During 2014, 2,497,000 units of ore were extracted and 2,187,000 of these units were sold.

Compute the following.

The total amount of depletion for 2014. (Round per unit answer to 2 decimal places, e.g. 0.45 for computational purpose and final answer to 0 decimal places, e.g. 45,892

- $ ??

The amount that is charged as an expense for 2014 for the cost of the minerals sold during 2014. (Round answer to 0 decimal places, e.g. 45,892.)

- $ ??

The amount that is charged as an expense for 2014 for the cost of the minerals sold during 2014. (Round answer to 0 decimal places, e.g. 45,892.)

$??

Explanation / Answer

Depletion Expense = Cost Salvage Value × Number of Units Extracted Estimated Number of Units Cost          952,680 Less: Land value       (109,200)          843,480 development costs          185,640 Restoration cost            43,680 Total Cost      1,072,800 Estimated Number of Units    11,920,000 Number of Units Extracted      2,497,000 Unit sold      2,187,000 Total Expense          224,730 Cost of Minerals sold in 2014          196,830

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