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Problem 8 - 3 4 A Accounting for depletion Flannery Company engages in the exploration and development of many types of natural resources. In the
Problem A Accounting for depletion Flannery Company engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities: Jan. Year Purchased for $ a silver mine estimated to contain tons of silver ore. July Year Purchased for $ cash a tract of land containing timber estimated to yield board feet of lumber. At the time of purchase, the land had an appraised of $ Feb. Year Purchased for $ a gold mine estimated to yield tons of goldveined ore Sept. Year Purchased oil reserves for $ The reserves were estimated to contair barrels of oil, of which would be unprofitable to pump. Required a Prepare the journal entries to account for the following: The Year purchases. Depletion on the Year purchases, assuming that tons of silver were mined an board feet of lumber were cut. The Year purchases. Depletion on the four natural resource assets, assuming that tons of silver ore, board feet of lumber, tons of gold ore, and barrels of oil were extracted. b Prepare the portion of the December Year balance sheet that reports natural resources. c Assume that in Year the estimates changed to reflect only tons of gold ore remainit Prepare the depletion journal entry in Year to account for the extraction of tons of gold
Problem A Accounting for depletion
Flannery Company engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities:
Jan. Year Purchased for $ a silver mine estimated to contain tons of silver ore. July Year Purchased for $ cash a tract of land containing timber estimated to yield board feet of lumber. At the time of purchase, the land had an appraised of $
Feb. Year Purchased for $ a gold mine estimated to yield tons of goldveined ore Sept. Year Purchased oil reserves for $ The reserves were estimated to contair barrels of oil, of which would be unprofitable to pump.
Required
a Prepare the journal entries to account for the following:
The Year purchases.
Depletion on the Year purchases, assuming that tons of silver were mined an board feet of lumber were cut.
The Year purchases.
Depletion on the four natural resource assets, assuming that tons of silver ore, board feet of lumber, tons of gold ore, and barrels of oil were extracted.
b Prepare the portion of the December Year balance sheet that reports natural resources.
c Assume that in Year the estimates changed to reflect only tons of gold ore remainit Prepare the depletion journal entry in Year to account for the extraction of tons of gold
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