Exhibit 11-04 Kieso Company Purchased a Tract of Land for $4,500,000 in $4,500,000

question 89

Multiple Choice

Exhibit 11-04
Kieso Company purchased a tract of land for $4,500,000 in anticipation of extracting 1,425,000 tons of ore. The residual value of the land is expected to be $480,000. The company mines 125,000 tons of ore in the first year.
-Refer to Exhibit 11-04, what amount of depletion was recorded in that first year?

• A) $395,000
• B) $352,500
• C) $437,500
• D) $375,000

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Definitions:

Agency Problem

A conflict of interest between the principals, such as shareholders, and the agents managing the company, like executives or managers.

Empire Building

A strategy where a company's executives expand their organization's size and operations, often to increase power and control, regardless of shareholder benefit.

Corporate Jets

Private aircraft owned or leased by corporations for the purpose of transporting executives and employees, often to support business operations more efficiently.

Real Assets

Physical or tangible assets such as real estate, commodities, or natural resources that have intrinsic value.