Recording Depletion Costs Smythe & Company developed an open-pit nickel mine containing an estimated 200,000 tons of
Question:
Recording Depletion Costs Smythe & Company developed an open-pit nickel mine containing an estimated 200,000 tons of ore. The total cost of purchasing the mine, opening it for operations, and the estimated cost of closing the mine was $84,000,000. Prior to January 1, 2000, Smythe mined 140,000 tons of ore. At that date, the company concluded that total production from the mine would be 250,000 tons of ore and the costs of closing the mine would increase from $4,000,000 to $8,500,000. During 2000, Smythe removed 35,000 tons of ore from the mine.
a. What amount of accumulated depletion should Smythe &
Company have recorded by January 1, 2000?
b. What amount of depletion should Smythe & Company record for 2000?
Step by Step Answer:
Financial Accounting A Decision Making Approach
ISBN: 9780471328230
2nd Edition
Authors: Thomas E. King, Valdean C. Lembke, John H. Smith