Johansan Mining Company Purchased a Mine for $80 Million Which

question 56

Essay

Johansan Mining Company purchased a mine for $80 million which is estimated to have 250,000 tonnes of ore and a residual value of $10 million. In the first year 50,000 tonnes of ore are extracted and sold. In the second year 150,000 tonnes of ore are extracted but only 125,000 tonnes are sold.
Instructions
a. Prepare the journal entry to record depreciation expense for the first year and the second year.
b. What amount and in what account are the tonnes of ore not sold reported?

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Definitions:

Over-Differentiation

refers to the creation of product variations that exceed customer needs or desires, potentially leading to confusion and reduced sales.

Monopolistically Competitive Industries

Industries in which many firms compete by selling products that are similar but not identical, allowing for product differentiation.

Lack of Variety

A situation in a market where there are few different options or types of products available to consumers, potentially leading to decreased consumer satisfaction.

Close Substitute

A product or service that can easily replace another in consumption or use, due to similarities in characteristics or functionalities.