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Inventoriable cost to be recorded in 2007, depletion, depreciation, total

Accounting
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January 1, 2006, the Corp acquired a parcel of land for 4000000, and they expect to extract 250000 tons of ore over 10 yrs. The land the land will be reclaimed at an estimated cost of 500000 and sold for estimated 250000. in 2007 a building was constructed on the mine site for 580000, with estimated 0 value when mining is complete. in 2006 15000 tons were mined, in 2005 19000 tons and beginning of 2007 ore remaining was estimated at 200000 tons.

prepare depletion entry for 2006

Mar 25th, 2015

Alright, first of all we need to calculate the depletion expense.

Depletion expense =[ Cost - Salvage value / Estimated number of units ] * number of units extracted

Depletipon expense = (4,000,000  - 250,000 / 2,500,000) * 15000 = $ 22500

Depletion entry for 2006 is:

(debit) Depletion expense 22500

(credit)     Accumulated depletion - land  22500


Apr 1st, 2015

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