Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Buffalo Paper Products purchased 11, 100 acres of forested timberland in March 2017. The company paid $1, 887 per acre for this land, which was

image text in transcribed

Buffalo Paper Products purchased 11, 100 acres of forested timberland in March 2017. The company paid $1, 887 per acre for this land, which was above the $888 per acre most farmers were paying for cleared land. During April, May, June, and July 2017, Buffalo cut enough timber to build roads using moveable equipment purchased on April 1, 2017. The cost of the roads was $277, 500, and the cost of the equipment was $249, 750; this equipment was expected to have a $9, 990 salvage value and would be used for the next 15 years. Buffalo selected the straight-line method of depreciation for the moveable equipment. Buffalo began actively harvesting timber in August and by December had harvested and sold 599, 400 board feet of timber of the estimated 7, 492, 500 board feet available for cutting. In March 2018, Buffalo planted new seedlings in the area harvested during the winter. Cost of planting these seedlings was $133, 200. In addition, Buffalo spent $8, 880 in road maintenance and $6, 660 for pest spraying during calendar-year 2018. The road maintenance and spraying are annual costs. During 2018, Buffalo harvested and sold 859, 140 board feet of timber of the estimated 7, 159, 500 board feet available for cutting. In March 2019, Buffalo again planted new seedlings at a cost of $166, 500, and also spent $16, 650 on road maintenance and pest spraying. During 2019, the company harvested and sold 721, 500 board feet of timber of the estimated 7, 215,000 board feet available for cutting. Compute the amount of depreciation and depletion expense for each of the 3 years (2017, 2018, and 2019). Assume that the roads are usable only for logging and therefore are included in the depletion base. (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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Food Hygiene Auditing

Authors: N. Chesworth

1997th Edition

1461380545, 978-1461380542

More Books

Students also viewed these Accounting questions