Question
eBook Question Content Area Depletion On January 2, 2019, Whistler Company purchased land for $480,000, from which it is estimated that 410,000 tons of ore
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Question Content Area
Depletion
On January 2, 2019, Whistler Company purchased land for $480,000, 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 $56,000, after which it could be sold for $29,000.
During 2019, Whistler mined 80,000 tons and sold 68,000 tons. During 2020, Whistler mined 110,000 tons and sold 99,000 tons. At the beginning of 2021, Whistler spent an additional $110,000, which increased the reserves by 70,000 tons. In 2021, Whistler mined 154,000 tons and sold 164,000 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.
Question Content Area
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 aefe910d6fcd04f_1 | |
| Depletion included in inventory | $fill in the blank aefe910d6fcd04f_2 | ||
| 2020 | Depletion deducted from income | $fill in the blank aefe910d6fcd04f_3 | |
| Depletion included in inventory | $fill in the blank aefe910d6fcd04f_4 | ||
| 2021 | Depletion deducted from income | $fill in the blank aefe910d6fcd04f_5 | |
| Depletion included in inventory | $fill in the blank aefe910d6fcd04f_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.
| December 31, 2019 | ||
| Mineral ore resources | $fill in the blank 63c263f8e00003c_1 | |
| Less: Accumulated depletion | fill in the blank 63c263f8e00003c_2 | |
| $fill in the blank 63c263f8e00003c_3 | ||
| December 31, 2020 | ||
| Mineral ore resources | $fill in the blank 63c263f8e00003c_4 | |
| Less: Accumulated depletion | fill in the blank 63c263f8e00003c_5 | |
| $fill in the blank 63c263f8e00003c_6 | ||
| December 31, 2021 | ||
| Mineral ore resources | $fill in the blank 63c263f8e00003c_7 | |
| Less: Accumulated depletion | fill in the blank 63c263f8e00003c_8 | |
| $fill in the blank 63c263f8e00003c_9 |
Question Content Area
3. Assume Whistler's discount rate was 9%. What is the balance in the asset retirement obligation at 2019, 2020, and 2021?
| December 31, 2019 | |
| December 31, 2020 | $fill in the blank 0325e5fc1fa1f93_2 |
| December 31, 2021 | $fill in the blank 0325e5fc1fa1f93_3 |
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New Perspectives In Accounting Ethics
Authors: Emerald Group Publishing Limited
23rd Edition
1785608673, 9781785608674
