ZuoTi.Pro
Question

On january 15, 2019, Vern purchased the rights to a mineral interest for $2,500,000. At the...

On january 15, 2019, Vern purchased the rights to a mineral interest for $2,500,000. At the time it was estimated that the recoverable units would be 500,000. During the year, 40,000 units were mined and 25,000 units were sold for $800,000. Vern incurred expenses during 2019 of $500,000. The percentage depletion rate is 22%. Determine Vern's depletion deduction for 2019.

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Explanation:

Depletion expenses = cost - salvage vale / estimated number of units * number of units extracted

                                     = $2,500,000 - 0 / 500,000 * 25,000 = $ 125,000

Present depletion = $800,000 * 22/100 = $176,000

Note : present depletion method is not acceptable as per IRS for certain natural resources . So cast depletion method is used

0 0
Add a comment
Know the answer?
Add Answer to:
On january 15, 2019, Vern purchased the rights to a mineral interest for $2,500,000. At the...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • QUESTION 10 On January 15, 2020, Dillon purchased the rights to a mineral interest for $3,500,000....

    QUESTION 10 On January 15, 2020, Dillon purchased the rights to a mineral interest for $3,500,000. At that time it was estimated that the recoverable units would be 500,000. During the year, 40,000 units were mined and 25,000 units were sold for $800,000. Dillon incurred expenses during 2020 of $500,000. The percentage depletion rate is 22%. Determine Dillon's depletion deduction for 2020. a. $176,000 b.$150,000 O c. $175,000 od. $200,000

  • T’Challa purchased the rights to a vibranium mineral interest for $3,500,000 on January 20, 2018. At...

    T’Challa purchased the rights to a vibranium mineral interest for $3,500,000 on January 20, 2018. At that time it was estimated that the recoverable units would be 500,000. During the year, 40,000 units were mined and 25,000 units were sold for $800,000. Dillon incurred expenses during 2018 of $450,000. The statutory percentage depletion rate for vibranium is 22%. Determine T’Challa’s maximum depletion deduction for 2018.

  • new 2018 tax law applies On May 5 of the current tax year, Byrne purchased a...

    new 2018 tax law applies On May 5 of the current tax year, Byrne purchased a patent that qualifies as a $ 197 intangible. The cost of the patent was $207,000 and Byrne is a calendar year taxpayer. In the current tax year, how much of the patent's cost may Byrne amortize? a. $1,150. b. $4,600. c. $9,200 d. $13,800 On January 15, 2019, Dillon purchased the rights to a mineral interest for $3,500,000. At that time, it was estimated...

  • QUESTIONS James purchased a new business asset (three-year personalty) on July 23, 2020, at a cost...

    QUESTIONS James purchased a new business asset (three-year personalty) on July 23, 2020, at a cost of $40,000. James takes additional first year depreciation but does not elect Section 179 expense on the asset. Determine the cost recovery deduction for 2020 a $8,333 b. $26,666 Oc$33,333 O d. 540,000 OeNone of the above QUESTION 9 On January 1, 2020, SymboNet Company completed its acquisition of NetOpen. As part of the acquisition, S2 million was allocated to goodwill. What is SymboNet's...

  • Lindsey purchased a uranium interest for 10,000,000 on January 3, when recoverable reserves were estimated at...

    Lindsey purchased a uranium interest for 10,000,000 on January 3, when recoverable reserves were estimated at 200,000 units. A total of 10,000 units were extracted in 2018 and 7,000 units were sold in 2018. Gross income from the property was 2,800,000 ad taxable income without the allowance for depletion was 1,000,000. Determine her depletion deduction for 2018. the percentage depletion rate is 22%

  • Exercise 8-29 (Algorithmic) (LO. 8) On March 25, 2019, Parscale Company purchases the rights to a...

    Exercise 8-29 (Algorithmic) (LO. 8) On March 25, 2019, Parscale Company purchases the rights to a mineral interest for $8,563,000. At that time, the remaining recoverable units in the mineral interest are estimated to be 804,200 tons. If required, round any division to two decimal places and use in subsequent computations. Round your final answer to the nearest dollar. If 723,780 tons are mined and 120,630 tons are sold this year, calculate Parscale's cost depletion for 2019.

  • Exercise 8-29 (Algorithmic) (LO. 8) On March 25, 2019, Parscale Company purchases the rights to a...

    Exercise 8-29 (Algorithmic) (LO. 8) On March 25, 2019, Parscale Company purchases the rights to a mineral interest for $8,480,500. At that time, the remaining recoverable units in the mineral Interest are estimated to be 632,000 tons. If required, round any division to two decimal places and use in subsequent computations. Round your final answer to the nearest dollar. If 80,000 tons are mined and 75,000 tons are sold this year, calculate Parscale's cost depletion for 2019, $ 1,006,389

  • Depletion Entries Alaska Mining Co. acquired mineral rights for $10,514,000. The mineral deposit is estimated at...

    Depletion Entries Alaska Mining Co. acquired mineral rights for $10,514,000. The mineral deposit is estimated at 75,100,000 tons. During the current year, 11,250,000 tons were mined and sold. a. Determine the amount of depletion expense for the current year. Round the depletion rate to two decimals places. $ b. Journalize the adjusting entry on December 31 to recognize the depletion expense. ^ ^

  • Depletion Entries Alaska Mining Co. acquired mineral rights for $27,740,000. The mineral deposit is estimated at...

    Depletion Entries Alaska Mining Co. acquired mineral rights for $27,740,000. The mineral deposit is estimated at 146,000,000 tons. During the current year, 21,900,000 tons were mined and sold. a. Determine the amount of depletion expense for the current year. Round the depletion rate to two decimals places. b. Journalize the adjusting entry on December 31 to recognize the depletion expense.

  • Depletion Entries Alaska Mining Co. acquired mineral rights for $23,368,000. The mineral deposit is estimated at...

    Depletion Entries Alaska Mining Co. acquired mineral rights for $23,368,000. The mineral deposit is estimated at 101,600,000 tons. During the current year, 15,250,000 tons were mined and sold. a. Determine the amount of depletion expense for the current year. Round the depletion rate to two decimals places. b. Journalize the adjusting entry on December 31 to recognize the depletion expense.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT