3. Intangible Assets a. Depletion Baker purchased a gravel field for $500,000. It should produce gravel...

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3. Intangible Assets a. Depletion Baker purchased a gravel field for $500,000. It should produce gravel for 8 years and then

business accounting

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Answer 1

Answer #1

1. Depletion base = Acquiring cost+Exploration Cost + Restoration Cost

AC=500,000

EC=0

RC=75000

DB=500,000+75,000 = 575,000

2. Depletion Charge = (Depletion base-Salvage Value)/Total Units to be extracted = 575000-50000 / (500000) = $1.05/ton

3.Amortization expense = (70000+150000)/4 = 220000/4 = $55000

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Answer 2

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