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August 2, 2015

Homework Help: Accounting

Posted by Cindy on Friday, February 13, 2009 at 11:29am.

In 2000, purchased land for $5,600,000 that had a natural resource supply estimated at 4,000,000 tons. When the natural resources are removed, the land has an estimated value of $640,000. The required restoration cost for the property is estimated to be $800,000.

Development and road construction costs on the land were $560,000, and a building was constructed at a cost of $88,000 with an estimated $8,000 salvage value when all the natural resources have been extracted.

During 2001, additional development costs of $272,000 were incurred, but additional resources were not discovered. Production for 2000 and 2001 was 700,000 tons and 900,000 tons, respectively.

Compute the depletion charge for 2000 and 2001. Include depreciation on the building, if any, as a depletion charge. Round depletion charge to the nearest cent.

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