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E11-19 (Depletion ComputationsTimber) Stanislaw Timber Company owns 9,000 acres of timberland purchased in 2003 at a cost of $1,400 per acre. At the time of
E11-19 (Depletion ComputationsTimber) Stanislaw Timber Company owns 9,000 acres of timberland |
purchased in 2003 at a cost of $1,400 per acre. At the time of purchase, the land without the timber was |
valued at $400 per acre. In 2004, Stanislaw built fire lanes and roads, with a life of 30 years, at a cost of |
$84,000. Every year, Stanislaw sprays to prevent disease at a cost of $3,000 per year and spends $7,000 to |
maintain the fire lanes and roads. During 2005, Stanislaw selectively logged and sold 700,000 board feet of |
timber, of the estimated 3,500,000 board feet. In 2006, Stanislaw planted new seedlings to replace the trees |
cut at a cost of $100,000. |
Instructions |
(a) Determine the depreciation expense and the cost of timber sold related to depletion for 2005. |
(b) Stanislaw has not logged since 2005. If Stanislaw logged and sold 900,000 board feet of timber in |
2016, when the timber cruise (appraiser) estimated 5,000,000 board feet, determine the cost of timber |
sold related to depletion for 2016. |
Please explain the answers so I can fully understand the process thank you |
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