Sup 9-2: Week 9 Post Assignments Powers Lake Sand and Gravel Powers Lake Sand and Gravel opened a new gravel pit to support highway construction in 2012 During 2012, the following major expenditures were made Land acquisition Legal fees to secure mining permits Cost of administration building Cost of scales Gravel sorting and crushing machinery (purchased used) 2,500,000 400,000 80,000 31,000 150,000 Road construction to access mine area 450,000 The mining started in 2012. It was anticipated that 4 million tons of gravel would be removed over a 6 year time period. The estimated cost of restoring the land to usable condition six years from now as required under the mining permit) is estimated at $250,000. Assume an interest rate of 4% annual. It is anticipated that the land could then be sold for $600,000. The administrative building is movable and is expected to be used for 6 years and is expected to have a salvage value of $20,000. The scales and crushing equipment are movable and have 10 year lives with no salvage value. The roads only use is to support mining activities. All depreciable, assets use straight-line depreciation. At the end of 2013, additional boring tests suggested that there were more reserves than originally estimated. Early in 2014, $300,000 was spent on blasting to increase the amount of gravel to be removed The following removal and estimated reserves of gravel apply: Year Gravel removed during the Estimated remaining gravel at year end year 2012 500,000 tons 2,500,000 tons 2013 800,000 tons 1,700,000 tons 2014 600,000 tons 1,800,000 tons 2015 600,000 tons 1,200,000 tons Required: 1. The capitalizable costs by major balance sheet account title on the opening day of mining (January 1, 2012). 2. Depletion and depreciation calculations for 2012 through 2015. Include a calculation of the cost of the gravel per ton. 3. The entry to record depletion and depreciation on December 31, 2012