A Company Purchased Mining Property Containing 7,350,000 Tons of Ore

question 57

Essay

A company purchased mining property containing 7,350,000 tons of ore for $1,837,500.In 2012 it mined and sold 857,000 tons of ore and in 2013 it mined and sold 943,000 tons of ore.Calculate the depletion expense for 2012 and 2013.What was the book value of the property at the end of 2013?

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Definitions:

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditures to the period in which they actually occurred, ensuring that financial statements reflect accurate values.

Depreciation

A method of allocating the cost of a tangible asset over its useful life.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the appropriate period.

Accrued Fees

Accrued Fees refer to charges incurred by an entity for services performed but not yet billed or paid at the reporting date.