Question
OrioleMining Company has a December 31 fiscal year end. The following information relates to its Golden Grove mine: 1.Oriolepurchased the Golden Grove mine on March
OrioleMining Company has a December 31 fiscal year end. The following information relates to its Golden Grove mine:
1.Oriolepurchased the Golden Grove mine on March 31, 2020, for $2.90million cash. On the same day, modernization of the mine was completed at a cash cost of $360,000. It is estimated that this mine will yield590,000tonnes of ore. The mine's estimated residual value is $310,000.Orioleexpects it will extract all the ore, and then close and sell the mine site in four years.2.During 2020,Orioleextracted and sold140,000tonnes of ore from the mine.3.At the beginning of 2021,Oriolereassessed its estimate of the remaining ore in the mine.Orioleestimates that there are still562,500tonnes of ore in the mine at January 1, 2021. The estimated residual value remains at $310,000.4.During 2021,Orioleextracted and sold200,000tonnes of ore from the mine.
Prepare the 2020 and 2021 journal entries for the above, including any year-end adjustments.
- Record depletion on 2020 and 2021
- Record cost of goods sold on 2020 and 2021
- Show how the Golden Grove mine will be reported onOriole's December 31, 2021, balance sheet.
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