In 2016, the Marion Company purchased land containing a mineralmine for $1,790,000. Additional costs of $776,000 were incurred todevelop the mine. Geologists estimated that 350,000 tons of orewould be extracted. After the ore is removed, the land will have aresale value of $116,000.
To aid in the extraction, Marionbuilt various structures and small storage buildings on the site ata cost of $196,000. These structures have a useful life of 10years. The structures cannot be moved after the ore has beenremoved and will be left at the site. In addition, new equipmentcosting $99,000 was purchased and installed at the site. Mariondoes not plan to move the equipment to another site, but estimatesthat it can be sold at auction for $4,500 after the mining projectis completed.
In 2016, 69,000 tons of ore wereextracted and sold. In 2017, the estimate of total tons of ore inthe mine was revised from 350,000 to 462,400. During 2017, 78,000tons were extracted.
Required:
1. Compute depletion and depreciation of the mine and the miningfacilities and equipment for 2016 and 2017. Marion uses theunits-of-production method to determine depreciation on miningfacilities and equipment. (Round the intermediatecalculation to 3 decimal places.)
In 2016, the Marion Company purchased land containing a mineralmine for $1,790,000. Additional costs of $776,000 were incurred todevelop the mine. Geologists estimated that 350,000 tons of orewould be extracted. After the ore is removed, the land will have aresale value of $116,000. |
To aid in the extraction, Marionbuilt various structures and small storage buildings on the site ata cost of $196,000. These structures have a useful life of 10years. The structures cannot be moved after the ore has beenremoved and will be left at the site. In addition, new equipmentcosting $99,000 was purchased and installed at the site. Mariondoes not plan to move the equipment to another site, but estimatesthat it can be sold at auction for $4,500 after the mining projectis completed. |
In 2016, 69,000 tons of ore wereextracted and sold. In 2017, the estimate of total tons of ore inthe mine was revised from 350,000 to 462,400. During 2017, 78,000tons were extracted. |
| Required: |
| 1. | Compute depletion and depreciation of the mine and the miningfacilities and equipment for 2016 and 2017. Marion uses theunits-of-production method to determine depreciation on miningfacilities and equipment. (Round the intermediatecalculation to 3 decimal places.) |
Related questions
In 2013, the Marion Company purchased land containing a mineralmine for $1,900,000. Additional costs of $753,000 were incurred todevelop the mine. Geologists estimated that 460,000 tons of orewould be extracted. After the ore is removed, the land will have aresale value of $100,000. | |||
To aid in the extraction, Marion built various structures andsmall storage buildings on the site at a cost of $186,300. Thesestructures have a useful life of 10 years. The structures cannot bemoved after the ore has been removed and will be left at the site.In addition, new equipment costing $86,800 was purchased andinstalled at the site. Marion does not plan to move the equipmentto another site, but estimates that it can be sold at auction for$4,000 after the mining project is completed. | |||
| In 2013, 56,000 tons of ore were extracted and sold. In 2014,the estimate of total tons of ore in the mine was revised from460,000 to 547,500. During 2014, 86,000 tons were extracted, ofwhich 66,000 tons were sold. 1. Compute depletion and depreciation of the mine and the miningfacilities and equipment for 2013 and 2014. Marion uses theunits-of-production method to determine depreciation on miningfacilities and equipment
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