Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On January 2, 2020, Pork Mining Company acquired land with ore deposits at a cash cost of $6,000,000. Exploration and development costs amounted to $500,000.
On January 2, 2020, Pork Mining Company acquired land with ore deposits at a cash cost of $6,000,000. Exploration and development costs amounted to $500,000. The residual value of the land is expected to be $1.200,000. The ore deposits contain an estimated 11 million tons. Present technology will allow the economical extraction of only 90% of the total deposit. Machinery, equipment, and temporary sheds were installed at a cost of $1,000,000. The assets will have no further value to the company when the ore body is exhausted, and they have a physical life of 12 years. The company expects the mine to be exhausted in 10 years, with sharp variations in annual production. In the year 2020, there were 400,000 tons of ore extracted. Required: A. Prepare a schedule to compute the depletion charge for 2020, B. Compute the depreciation charge for 2020 under the units of production method. C. If all other mining costs in 2020, except the depletion and depreciation calculated above, amounted to $3.920.000. what was the average cost per ton mined in 2020? USE THIS FORMAT Calculation of depletion for 2020: Cash cost Exploration and development costs Residual value of the land Depletable basis Number of extractable tons Depletion cost per ton Tons extracted in 2020 Depletion for 2020 B. Calculation of depreciation for 2020: Cost of depreciable assets Number of extractable tons Depreciation basis per ton Tons extracted in 2020 Depreciation for 2020 C. Calculation of total mining costs for 2020: Depletion Depreciation Other mining costs Total mining costs Tons extracted in 2020 Total average cost per ton
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access with AI-Powered 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