On January 1, 2014, Cooper Tree Company (CTC) Purchases a Copper

question 37

Multiple Choice

On January 1, 2014, Cooper Tree Company (CTC) purchases a copper mine for €15,000,000. The mine is estimated to have 20 million tons of copper and no residual value. CTC estimates that it will take 10 years to extract all the copper contained in the mine. CTC spends an additional €3,000,000 during the early part of 2014 preparing the mine. During 2014, CTC extracts 3 million tons of copper; however due to price fluctuations none of the copper is sold during 2014. On CTC's financial statement for 2014, how would the depletion associated with the extracted copper be reported?

• A) As an expense on the income statement.
• B) As inventory on the statement of financial position.
• C) As a loss on the income statement.
• D) As part of comprehensive income(unrealized gain).

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Definitions:

Self-employment Income

Income generated from conducting business as an independent contractor, freelancer, or business owner, rather than as an employee.

Ordinary Income

Income earned from standard operations, including wages, salaries, tips, and interest, subject to regular taxation rates.

S Corporations

A type of corporation that meets specific Internal Revenue Code requirements, allowing it to pass income directly to shareholders and avoid double taxation.

Royalties

Payments made to the owner of certain types of intellectual property, rights, or assets for the use of said property by others.