A Company Purchased Mining Property That Containing 15,000,000 Tons of Ore

question 157

Essay

A company purchased mining property that containing 15,000,000 tons of ore for $4,875,000.In 2012,the company mined and sold 789,000 tons of ore and in 2013,it mined and sold 1,235,000.Calculate the depletion expense for 2012 and 2013.

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Definitions:

Financial Leases

A type of lease where the lessee has use of the asset for a significant portion of its useful life, and the lease terms closely resemble the conditions of outright ownership.

Capitalized

To be capitalized means to record an expense as an asset on the balance sheet rather than an immediate expenditure, spreading its impact over its useful life.

Lease Obligations

Financial commitments arising from lease agreements, which may include future lease payments for rented equipment or property.

Coupon Rate

The rate of interest paid yearly on a bond, represented as a percentage of its face value.