Conan Logging and Lumber Company, a small private company that follows ASPE, owns 3,200 hectares of timberland on the north side of Mount Leno, which was purchased in 2008 at a cost of $550 per hectare. In 2020, Conan began selectively logging this timber tract. In May 2020, Mount Leno erupted, burying Conans timberland under 15 cm of ash. All of the timber on the Conan tract was downed. In addition, the logging roads, built at a cost of $155,000, were destroyed, as well as the logging equipment, with a carrying amount of $310,000. At the time of the eruption, Conan had logged 20% of the estimated 500,000 cubic metres of timber. Before the eruption, Conan estimated the land to have a value of $200 per hectare after the timber was harvested. Conan includes the logging roads in the depletion base. Conan estimates it will take three years to salvage the downed timber at a cost of $730,000. The timber can be sold for pulpwood at an estimated price of $3 per cubic metre. The value of the land is unknown, but must be considered nominal due to future uncertainties.

Determine the depletion cost per cubic metre for the timber that was harvested before Mount Leno erupted. (Round answer to 2 decimal places, e.g. 2.50.)

Depletion cost

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depletion per m3

Prepare the journal entry to record the depletion before the eruption. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Do not round intermediate calculations. Round final answers to 0 decimal places, e.g. 5,725.)

Account Titles and Explanation	Debit	Credit
InventoryCashNo EntryAccumulated DepletionTimberAccumulated DepreciationLogging Roads
Accumulated DepreciationLogging RoadsAccumulated DepletionTimberInventoryNo EntryCash
Accumulated DepreciationLogging RoadsNo EntryInventoryAccumulated DepletionTimberCash

Determine the amount of the estimated loss before income taxes.

Loss due to eruption of Mt. Leno

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