On July 23 of the current year, Dakota Mining Co. pays $4,715,000 for land estimated to contain
5,125,000 tons of recoverable ore. It installs machinery costing $410,000 that has a 10-year life and no salvage
value and is capable of mining the ore deposit in eight years. The machinery is paid for on July 25,
seven days before mining operations begin. The company removes and sells 480,000 tons of ore during its
first five months of operations. Depreciation of the machinery is based on the units of production method
as the machinery will be abandoned after the ore is mined.
Required
1. Prepare entries to record (a) the purchase of the land, (b) the cost and installation of machinery,
(c) the first five months’ depletion assuming the land has a net salvage value of zero after the ore is
mined, and (d) the first five months’ depreciation on machinery.
2. Describe both the similarities and differences in amortization, depletion, and depreciation.
Check (c) Depletion, $441,600
(d) Depreciation, $38,400
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.