Answer:
ore deposits 7,147,920 debit
cash 7,147,920 credit
--to record purchase of land with ore deposit--
machinery 1,900,080 debit
account payable 1,900,080 credit
Account payable 1,900,080 debit
Cash 1,900,080 credit
--to record machine installation and payment of it 2 days later--
depletion expense 368,535
depreciation expense 97,965
ore deposit 368,535
equipment accumulated depreciation 97.965
Explanation:
the first entries are quite self-explanatory
<u>Now, to calculate the depreication and depletion:</u>
The machine will be depreciate at the same phase as the ore deposit As the asset is relate to it and will have no value after the miniming project ends.
depreciation for the year:
466,500 / 9,048,000 x 7,147,920 = 368.535 ore deposit amortization
466,500 / 9,048,000 x 1,900,080 = 97.965 equipment depreciation
