Question
Depletion On January 2, 2019, Whistler Company purchased land for $470,000, from which it is estimated that 410,000 tons of ore could be extracted. It
Depletion
On January 2, 2019, Whistler Company purchased land for $470,000, from which it is estimated that 410,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $66,000, after which it could be sold for $39,000.
During 2019, Whistler mined 76,000 tons and sold 57,000 tons. During 2020, Whistler mined 103,000 tons and sold 101,000 tons. At the beginning of 2021, Whistler spent an additional $110,000, which increased the reserves by 62,000 tons. In 2021, Whistler mined 140,000 tons and sold 149,000 tons. Whistler uses a FIFO cost flow assumption.
Required:
If required, round the depletion rate to the nearest cent and round the final answers to the nearest dollar.
1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021.
| 2019 | Depletion deducted from income | $fill in the blank eac53e032fbd068_1 | |
| Depletion included in inventory | $fill in the blank eac53e032fbd068_2 | ||
| 2020 | Depletion deducted from income | $fill in the blank eac53e032fbd068_3 | |
| Depletion included in inventory | $fill in the blank eac53e032fbd068_4 | ||
| 2021 | Depletion deducted from income | $fill in the blank eac53e032fbd068_5 | |
| Depletion included in inventory | $fill in the blank eac53e032fbd068_6 |
2. Complete the natural resources section of the balance sheet on December 31, 2019, 2020, and 2021, assuming that an accumulated depletion account is used.
| Whistler Company | ||
| Balance Sheet (partial) | ||
| December 31, 2019 - 2021 | ||
| December 31, 2019 | ||
| Mineral ore resources | $fill in the blank 961175001f8c011_1 | |
| Less: Accumulated depletion | fill in the blank 961175001f8c011_2 | |
| $fill in the blank 961175001f8c011_3 | ||
| December 31, 2020 | ||
| Mineral ore resources | $fill in the blank 961175001f8c011_4 | |
| Less: Accumulated depletion | fill in the blank 961175001f8c011_5 | |
| $fill in the blank 961175001f8c011_6 | ||
| December 31, 2021 | ||
| Mineral ore resources | $fill in the blank 961175001f8c011_7 | |
| Less: Accumulated depletion | fill in the blank 961175001f8c011_8 | |
| $fill in the blank 961175001f8c011_9 | ||
3. Assume Whistler's discount rate was 8%. What is the balance in the asset retirement obligation at 2019, 2020, and 2021?
| Whistler Company | |
| Asset retirement obligation | |
| 2019 - 2021 | |
| December 31, 2019 | $fill in the blank 5fe7c7076012fc1_1 |
| December 31, 2020 | $fill in the blank 5fe7c7076012fc1_2 |
| December 31, 2021 | $fill in the blank 5fe7c7076012fc1_3 |
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Forensic Accounting And Fraud Examination
Authors: Mary Jo Kranacher, Richard Riley
2nd Edition
1119494338, 9781119494331
