Benson Mining Company Purchased a Site Containing a Mineral Deposit

question 91

Essay

Benson Mining Company purchased a site containing a mineral deposit during 2010.The purchase price was $820,000,and the site is estimated to contain 400,000 tons of extractable ore.Benson constructed a building at the site,at a cost of $500,000,to be used while the ore is being extracted.When the ore reserves are gone,the building will have no further value.
Requirements:
A.Explain the objective of recording depletion on natural resources.
B.Determine Benson's depletion rate per ton of ore.
C.Prepare the journal entry to record depletion for the year 2010, when Benson mined and sold 150,000 tons of ore.
D.Prepare the journal entry to record depreciation on the building for 2010.Benson calculates depreciation on the building using the units-of-production method based on the amount of ore extracted (150,000 tons in 2010).

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Definitions:

Cognitive Evaluations

Mental processes involved in assessing, interpreting, and understanding one's environment and experiences.

Physiological Reactions

Bodily responses to stimuli, including changes in heart rate, breathing, perspiration, and adrenaline levels, among others.

Maternal Depression

A period of depression experienced by a mother, potentially occurring during pregnancy or after childbirth, impacting both her well-being and her interactions with her child.

Parent-Child Interactions

The various forms of exchange, communication, and relationship dynamics between a parent and child.