Question

I honeslty do not know what go do

Problem 6-33 Accounting for depletion LO 6-8 Flannery Company engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities: Jan. 1, 2018 Purchased for $1,480, eee a silver mine estimated to contain 124,000 tons of silver ore. July 1, 2018 Purchased for $1,8ee, see a tract of timber estimated to yield 2, e9e,eee board feet of lumber and the residual value of the land was estimated at $129,000. Feb. 1, 2019 Purchased for $3,ele, ee a gold mine estimated to yield 84,000 tons of gold-veined ore. Aug. 1, 2019 Purchased oil reserves for $1,341,080. The reserves were estimated to contain 250, eee barrels of oil, of which 20,000 would be unprofitable to pump. Required (For all requirements, Round "per" values to 2 decimal places and final answers to the nearest whole dollar amount.) a. Determine the amount of depletion expense that would be recognized on the 2018 income statement for each of the two reserve assuming 14,800 tons of silver were mined, and 600.000 board feet of lumber were cut. b. Determine the amount of depletion expense that would be recognized on the 2019 income statement for each of the four reserve assuming 29.000 tons of silver are mined, 330,000 board feet of lumber are cut, 4.100 toms on gold ore is mined, and 82,000 barrels of oil are extracted c. Prepare the portion of the December 31, 2019, balance sheet that reports natural resources.

Answer 1

(A & B)

a.	Depletion Expense-2018:
	Silver Mine	$167160
	Timber	$400000
b.	Depletion Expense-2018:
	Silver Mine	$238800
	Timber	$240000
	Gold Mine	$143320
	Oil Reserves	$291500

2018:

Depletion expense:

Silver Mine = (14000 × $11.94) = $167160

Timber = (500000 × $0.80) = $400000

2019:

Depletion expense:

Silver Mine = (20000 × $11.94) = $238800

Timber = (300000 × $0.80) = $240000

Gold Mine = (4000 × $35.83) = $143320

Oil Reserves = (50000 × $5.83) = $291500

Silver Mine depletion: $1480000 / 124000 = $11.94 per ton

Timber depletion: ($1800000 - $129000) / 2090000 = $0.80 per board foot.

Gold Mine depletion: $3010000 / 84000 = $35.83 per ton

Oil Reserves depletion: $1341000 ÷ (250000 − 20000) (profitable) = $5.83 per barrel

(C)

Natural Resources
Silver Mine	$1074040
Timber	$1031000
Gold Mine	$2866680
Oil Reserves	$1049500
Total Natural Resources	$6021220
Land	$129000
Total	$6150220

Silver mine (less depletion): $1480000 - $167160 - $238800 = $1074040

Timber (less depletion): $1671000 − $400000 - $240000 = $1031000

Gold mine (less depletion): $3010000 − $143320 = $2866680

Oil reserves (less depletion): $1341000 − $291500 = $1049500