Question

On January 2, 2019, Whistler Company purchased land for $420,000, from which it is estimated that 440,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $77,000, after which it could be sold for $24,000.

During 2019, Whistler mined 76,000 tons and sold 56,000 tons. During 2020, Whistler mined 105,000 tons and sold 106,000 tons. At the beginning of 2021, Whistler spent an additional $100,000, which increased the reserves by 68,000 tons. In 2021, Whistler mined 152,000 tons and sold 149,000 tons. Whistler uses a FIFO cost flow assumption.

Required:

If required, round the depletion rate to the nearest cent and round the final answers to the nearest dollar.

1. Calculate the depletion included in the income statement and ending inventory for 2019, 2020, and 2021.

2019	Depletion deducted from income	$
	Depletion included in inventory	$
2020	Depletion deducted from income	$
	Depletion included in inventory	$
2021	Depletion deducted from income	$
	Depletion included in inventory	$

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2. Complete the natural resources section of the balance sheet on December 31, 2019, 2020, and 2021, assuming that an accumulated depletion account is used.

Whistler Company
Balance Sheet (partial)
December 31, 2019 - 2021
December 31, 2019
Mineral ore resources	$
Less: Accumulated depletion
		$
December 31, 2020
Mineral ore resources	$
Less: Accumulated depletion
		$
December 31, 2021
Mineral ore resources	$
Less: Accumulated depletion
		$

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3. Assume Whistler's discount rate was 8%. What is the balance in the asset retirement obligation at 2019, 2020, and 2021?

Whistler Company
Asset retirement obligation
2019 - 2021
December 31, 2019	$
December 31, 2020	$
December 31, 2021	$

Answer 1

Answer Page No 0 10 don included income statement ending Inventory wu u uu W xl 2019 2020 2021 MU enit depletion rate on the (420,000 + 44000) - $ 24000 ton a 440,000 tons = $1.045 2019 :- Sold 56000 tons Depletion deducted frome Encome = 56000 x $ 1.045 = $ 60200 Depletion included in inventory = ( 76000 - 56000) *$2073 - $21500 2000 :- sold 106000 tons Depletien deducted from income - 106000 x $1.075 = $.113950 Ending inventory tons = 20,000.'+ 105000 - 106000 : = 19000 ton's (46000-56000 - 20000)

1. Page No @ Depletion Fancluding mo foventory = 19000 x $1045 = $20425 2031 :- sold 149000 tons Neas depletion ouete (181000x $1.075) +(47000 -- 24000) + 100,000 ( 440,000 -- 181000) + 68000 tons 347575 329000 = $2.063 por ton Depletion deducted from income = (152000-149000) $1075 + (roscoo x $1-063) = $115903 Depletion included % inventory = (1000 +3000) x $1.063 = 4*4252

2021 Page No ③ 2019 Depletion deducted from income $60.00 Deplettern included in inventory $ 21500 2020 Depletion cleoueled from imcome $ 113950 Depletion included in inventory $20425 Depletion deducted from income $ 115903 Depletion included in inventory $4052 @ Balance sheet 2019, Accumulated depletion = 46000 x 1075 ... = $81400 2020, Accumulated depletion = 181000x9075 :: 106000 + 68000 = 144000 = $194575 ( = 144000) 200 Accumulated depletion = (184000 X 1075) + (15200 X 1063) 5 $356151

Page No Amount 1 Amount Particular December 31, 2019 Assets Mineral ore oresowices Accomulated depletion $420,000 C$81400) * 338300 December 31, 2030 Mineral ooie oresources Accumulated depletion $420,000 16 $194575) *225425 December 31, 2021 Mineral ove sesources (100,000+429000) 520,000 Accumulated depletion (+356151) $ 163849 * Asset webivement obligation On dec 31, 2019 , . Asset retirement obligation = 47800 + (49000 48°/?) - 47000 + 6160

Page No 6 = $83160 ::-2019 - Asset rretivement obligation = $83/60 Om dee. 31, 2000, Asset sebisement obligation - 83160 + (83160X87.) = 83160 + 6653 = $89813 1 :.2020 - Asset vretirement obligahion = $89813 On dec 21, 2021, Asset setirement obligation = 89813 +689813887) 259813 + 7185 s 96998 1:12031 – Asset sretirement obligation – $96998