Blossom Paper Products purchased 12,300 acres of forested timberland in March 2020. The company paid $2,091 per acre for this land, which was above the
Blossom Paper Products purchased 12,300 acres of forested timberland in March 2020. The company paid $2,091 per acre for this land, which was above the $984 per acre most farmers were paying for cleared land. During April, May, June, and July 2020, Blossom cut enough timber to build roads using moveable equipment purchased on April 1, 2020. The cost of the roads was $308,900, and the cost of the equipment was $276,750; this equipment was expected to have a $11,070 salvage value and would be used for the next 15 years. Blossom selected the straight-line method of depreciation for the moveable equipment. Blossom began actively harvesting timber in August and by December had harvested and sold 664,200 board feet of timber of the estimated 8,302,500 board feet available for cutting. In March 2021, Blossom planted new seedlings in the area harvested during the winter. Cost of planting these seedlings was $147,500. In addition, Blossom spent $9,840 in road maintenance and $7,380 for pest spraying during calendar-year 2021. The road maintenance and spraying are annual costs. During 2021, Blossom harvested and sold 952,020 board feet of timber of the estimated 7,933,500 board feet available for cutting. In March 2022, Blossom again planted new seedlings at a cost of $184,500, and also spent $18,450 on road maintenance and pest spraying. During 2022, the company harvested and sold 799,500 board feet of timber of the estimated 7,995,000 board feet available for cutting. Compute the amount of depreciation and depletion expense for each of the 3 years (2020, 2021, and 2022). Assume that the roads are usable only for logging and therefore are included in the depletion base. (Round intermediate calculations to 5 decimal places e.g. 1.08541 and final answers to 0 decimal places, e.g. 45,892.) Ask for Depletion Expense and Depreciation Expense for 2020 2021 2022
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