Question

ber 31 of the curnent year Show computations Computing the Acquisition and Depletion of a Natural Resource E8-19 LOB-6 Feeport-McMoRan Copper & Gold Inc., headquartered in Phoenis, Ariaona, is " premier US bed natural resource company with an industry leading global portfolio of miseral assets, wignificant oil and natural gas resources and a growing production profile" At the end of a recent year, its assets nclade approximately 104 billion pounds of copper. 29 million ounces of gold, 3 billion pounds of molybdenum, 283 million ounces of silver, 860 million pounds of cobalt, and 390 million barrels of imated oil and natural gas reserves. Its annual revenues exceed $21.4 billion Assume that in February 2016, Freeport-McMoRan paid $800,000 for a mineral deposit in Indonesia ning March, it spent $70,000 in preparing the deposit for exploitation. It was estimated that 1,000000 a cubic yards could be extracted economically. During 2016, 60000 cubic yards were extracted. Dur glanuary 2017, the company spent anceher 56,000 for additional developmental work that inceased te estimated productive capacity of the mineral deposit. eired L Compute the acquisition cost of the deposit in 2016 . Compute depletion for 2016 3 Compute the net book value of the deposit after payment of the January 2017 developmental costs nof Theree Different Intangible Assets E8-20

Answer 1

1. acquisition cost	870,000
2. depletion for 2016	52,200
3. net book value	823,800

working:

acquisition cost = 800,000 payment for deposit + 70,000 in preparing cost

=>870,000.

2. depletion for 2016 = 870,000 acquisition cost / 1,000,000 total cubic yards *60,000 yards extracted =>52,200.

3.net book value = 870,000 - 52,200 depletion + 6,000 additional developmental work

=>823,800.