Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Coronado Paper Products purchased 11,200 acres of forested timberland in March 2020. The company paid $1,904 per acre for this land, which was above
Coronado Paper Products purchased 11,200 acres of forested timberland in March 2020. The company paid $1,904 per acre for this land, which was above the $896 per acre most farmers were paying for cleared land. During April, May, June, and July 2020, Coronado cut enough timber to build roads using moveable equipment purchased on April 1, 2020. The cost of the roads was $280,400, and the cost of the equipment was $252,000; this equipment was expected to have a $10,080 salvage value and would be used for the next 15 years. Coronado selected the straight-line method of depreciation for the moveable equipment. Coronado began actively harvesting timber in August and by December had harvested and sold 604,800 board feet of timber of the estimated 7,560,000 board feet available for cutting. In March 2021, Coronado planted new seedlings in the area harvested during the winter. Cost of planting these seedlings was $132,100. In addition, Coronado spent $8,960 in road maintenance and $6,720 for pest spraying during calendar-year 2021. The road maintenance and spraying are annual costs. During 2021, Coronado harvested and sold 866,880 board feet of timber of the estimated 7,224,000 board feet available for cutting. In March 2022, Coronado again planted new seedlings at a cost of $168,000, and also spent $16,800 on road maintenance and pest spraying. During 2022, the company harvested and sold 728,000 board feet of timber of the estimated 7,280,000 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 eg. 1.08541 and final answers to O decimal places, eg. 45,892)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started