Use the Following Information for Questions

question 33

Multiple Choice

Use the following information for questions.
On January 1, 2011, Edmondton Inc.purchased equipment with a cost of €4,500,000, a useful life of 12 years and no salvage value.The Company uses straight-line depreciation.At December 31, 2011, the company determines that impairment indicators are present.The fair value less cost to sell the asset is estimated to be €3,850,000.The asset's value-in-use is estimated to be €3,500,000.There is no change in the asset's useful life or salvage value.
-During 2010, Eldred Corporation acquired a mineral mine for $1,500,000 of which $200,000 was ascribed to land value after the mineral has been removed.Geological surveys have indicated that 10 million units of the mineral could be extracted.During 2010, 1,500,000 units were extracted and 1,200,000 units were sold.What is the amount of depletion expensed for 2010?

• A)$130,000.
• B)$156,000.
• C)$180,000.
• D)$195,000.

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Definitions:

Gross Profit

The distinction between sales income and the expense of goods sold prior to subtracting overhead costs, wages, taxes, and interest charges.

Periodic

Relating to or occurring at regular intervals; in accounting, it may refer to methods or adjustments made at regular intervals, such as the Periodic Inventory Method.

Inventory Method

An accounting approach used to value inventory, including procedures like First-In, First-Out (FIFO) or Last-In, First-Out (LIFO).

Perpetual

An inventory system where transactions are recorded in real-time, immediately affecting the inventory account, providing an ongoing record of inventory on hand.