91%). Sat Mar 24 5:28 est 3 Help Save&Exit; Submit an ore mine at a cost of $1,6

Question

91%). Sat Mar 24 5:28 est 3 Help Save&Exit; Submit an ore mine at a cost of $1,680,000. It incurs additional costs of $470,400 to access the mine, which is Perez Company acquires estimated to hold 1,200,000 tons of ore. 190,000 tons of ore are mined and sold the first year. The estimated value of the land after the ore is removed is $240,000. Calculate the depletion expense from the information given. (Round "Depletion per unit" to 3 decimal places.) Cost Salvage Amount subject to depletion Total units of capacity Depletion per unit Units extracted and sold in period 1. & 2. Prepare the entry to record the cost of the ore mine and year-end adjusting entry View transaction list Journal entry worksheet

Explanation / Answer

Q1. Req a: Cost 2,150,400 Ssalvage 240,000 Amount subject to ddepreciation 1,910,400 Total units of capacity 1,200,000 Depletion per unit 1.592 Units Extracted and sold in period 190,000 Depletion expense 302480 Journal entries: Mineral rights Dr. 2,150,400      Cash Account 2,150,400 Depletion expense Dr. 302,480      Acumulated Depletion-Mineral rights 302,480 Q2. SLM Cost    / Life of equipment    = Annual Depreciation 45700 / 10 years         = $4,570 Year -2 Depreciation 4570 Book Value at end of Yyear-2 36560 ($ 45700 - 4570*2) Q3. Annual Period Beginning Depreciation Partial Depreciation Accumulated Book Book value Rate Year Expense Depreciation Value 2016 288000 40% 0.75 86400 86400 201600 2017 201600 40% 1 80640 167040 120960

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