Use the following to answer questions 6 and 7:
The Peter Noone Company paid $200,000 for the rights to mine lead in Southeast Missouri and $2,400,000 to drill and erect a mine shaft. Equipment was also purchased for $1,800,000 to process the lead ore before shipment to customers. The mine is expected to yield 2,000,000 tons of ore during the 5 years it is expected to be in operation. Peter will not have to reclaim the land when mining is complete; it will be used as an “off road” park for all terrain vehicles. The equipment is salvageable and is expected to be worth $100,000 when mining is concluded. The mine started operations on January 1, 2021, and 300,000 tons of ore were extracted during the year.
6.Total depletion recorded by Peter Noone in 2021 is:
A)$360,000
B) $390,000
C) $660,000
D)$645,000
7. Total depreciation recorded by Peter Noone in 2021 is:
A)$340,000
B) $360,000
C) $270,000
D)$255,000
6.
Depletion = ($200000+2400000)/2000000 = $1.30 per ton
Depletion for 2021 = 300000 x $1.30 = $390000
Answer is B) $390,000
7.
Depreciation = ($1800000-100000)/5 = $340000
Answer is A) $340,000
Use the following to answer questions 6 and 7: The Peter Noone Company paid $200,000 for...
1. Bowie Company made a lump sum purchase of land, building, and equipment. The following were the appraised values of each element: PP&E Element Amount Land $10,000 Building 25,000 Equipment 45,000 Bowie paid $70,000 cash for the lump sum purchase. What value should be allocated to the building? (Enter only whole dollar values.) 2. Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $22,000 for the truck. The truck is expected to have a $2,500 residual value and...
1. Bowie Company made a lump sum purchase of land, building, and equipment. The following were the appraised values of each element: PP&E Element Amount Land $10,000 Building 25,000 Equipment 45,000 Bowie paid $70,000 cash for the lump sum purchase. What value should be allocated to the building? (Enter only whole dollar values.) 2. Cambridge Company purchased a truck on January 1, 2018. Cambridge paid $22,000 for the truck. The truck is expected to have a $2,500 residual value and...