ACCT 3110 Fall 2017/Chapter 11 Homework *Problem 11-5 Khamsah Mining Company has purchased a tract of mineral land for $900,000. It is estimated that this tract wi yield 120,000 tons of ore with sufficient mineral content to make mining and processing profitable. It is further estimated that 6,000 tons of ore will be mined the first and last year and 12,000 tons every year in between. (Assume i1 years of mining operations.) The land will have a salvage value of $30,000. The company builds necessary structures and sheds on the site at a cost of $36,000. It is estimated that these structures can serve 15 years but, because they must be dismantled if they are to be moved, they have no salvage value. The company does not intend to use the buildings elsewhere. Mining machinery installed at the mine was purchased secondhand at a cost of $60,000. This machinery cost the former owner $150,000 and was 50% depreciated when purchased. Khamsah Mining estimates that about half of this machinery will still be useful when the present mineral resources have been exhausted, but that dismantling and removal costs will just about offset its value at that time. The company does not intend to use the machinery elsewhere. The remaining machinery will last until about one-half the present estimated mineral ore has been removed and will then be worthless. Cost is to be allocated equally between these two classes of machinery As chief accountant for the company, you are to prepare a schedule showing estimated depletion and depreciation costs for each year of the expected life of the mine. (Round per unit answers to 2 decimal places, e.g. 0.45 for computational purposes and final answers to O decimal places, e.g. 45,892) Estimated depletion cost Depletion 1t Yr 3rd Yr 4 Yr 5th Yr 6h Yr. 10 Yr 11h Yr Estimated depreciation cost Year Building Machinery(1/2)Machinery (1/2) 1* Yr 2 Yr. 3rd Yr 4 Yr 5 Yr 10 Yr 11 Yr Also compute the depreciation and depletion for the first year assuming actual production of 5,000 tons. the year to cause the company engineers to change their estimates of ether the mineral resources or the life of the structures and equipment. Round per unit to 0 decimal ofaces. e.a.45.892.1 Nothing occurred during answers to 2 decimal places, e.g. 0.45 for computational purposes and final answers