Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN: 9781337788281
Author: James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher: Cengage Learning
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Chapter 11, Problem 12P
1.
To determine
Compute the amount of depletion involved in the income statement and ending inventory of Company W for 2019, 2020 and 2021.
2.
To determine
Prepare the natural resources section of the balance sheet of Company W on December 31, 2019, 2020 and 2021.
3.
To determine
Ascertain the balance in the asset retirement obligation for the year 2019, 2020 and 2021.
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On January 2, 2019, Whistler Company purchased land for $500,000, from which it is estimated that 400,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $59,000, after which it could be sold for
$30,000.
During 2019, Whistler mined 78,000 tons and sold 64,000 tons. During 2020, whistler mined 106,000 tons and sold 96,000 tons. At the beginning of 2021, Whistler spent an additional $90,000, which increased the reserves by 63,000 tons. In 2021, Whistler mined
138,000 tons and sold 140,000 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
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…
On January 2, 2019, Whistler Company purchased land for $450,000, from which it is estimated that 350,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $59,000, after which it could be sold for $21,000.
During 2019, Whistler mined 73,000 tons and sold 51,000 tons. During 2020, Whistler mined 95,000 tons and sold 103,000 tons. At the beginning of 2021, Whistler spent an additional $90,000, which increased the reserves by 57,000 tons. In 2021, Whistler mined 131,000 tons and sold 124,000 tons. Whistler uses a FIFO cost flow assumption.
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…
On January 2, 2019, Whistler Company purchased land for $530,000, from which it is estimated that 360,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $80,000, after which it could be sold for $26,000.
During 2019, Whistler mined 88,000 tons and sold 72,000 tons. During 2020, Whistler mined 114,000 tons and sold 115,000 tons. At the beginning of 2021, Whistler spent an additional $110,000, which increased the reserves by 54,000 tons. In 2021, Whistler mined 147,000 tons and sold 141,000 tons. Whistler uses a FIFO cost flow assumption.
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 CompanyBalance Sheet (partial)December 31, 2019 - 2021
December 31, 2019
Mineral ore resources
Less: Accumulated depletion
December 31, 2020
Mineral ore resources…
Chapter 11 Solutions
Intermediate Accounting: Reporting And Analysis
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