On January 2, 2013, Whistler Company purchased land for $450,000, from which it is estimated that 400,000
Question:
On January 2, 2013, Whistler Company purchased land for $450,000, from which it is estimated that 400,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $80,000, after which it could be sold for $30,000.
During 2013, Whistler mined 80,000 tons and sold 50,000 tons. During 2014, Whistler mined 100,000 tons and sold 120,000 tons. At the beginning of 2015, Whistler spent an additional $100,000, which increased the reserves by 60,000 tons. In 2015, Whistler mined 140,000 tons and sold 130,000 tons. Whistler uses a FIFO cost flow assumption.
Required:
1. Calculate the depletion included in the income statement and ending inventory for 2013, 2014, and 2015. Round the depletion rate to 2 decimal places.
2. Prepare the natural resources section of the balance sheet on December 31, 2013, 2014, and 2015, assuming that an accumulated depletion account is used.
3. Assume Whistler's discount rate was 8%. What is the balance in the asset retirement obligation at 2013, 2014, and 2015?
Ending InventoryThe ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...
Step by Step Answer:
1 Unit depletion rate per ton 125 per ton 2013 Sold 50000 tons Depletion deducted from income 50000 tons x 125 62500 Depletion included in inventory 3...View the full answer
Intermediate Accounting Reporting and Analysis
ISBN: 978-1111822361
1st edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
