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Sonja [21]
3 years ago
10

Tamarisk Corporation acquires a coal mine at a cost of $464,000. Intangible development costs total $116,000. After extraction h

as occurred, Tamarisk must restore the property (estimated fair value of the obligation is $92,800), after which it can be sold for $185,600. Tamarisk estimates that 4,640 tons of coal can be extracted. If 812 tons are extracted the first year, prepare the journal entry to record depletion.
Business
1 answer:
Strike441 [17]3 years ago
7 0

Answer:

Journal Entry

Date          Description                         Debit          Credit  

                Depletion expenses           $85,260

              Accumulated Depletion                          $85,260

Explanation:

Total cost of MIne

Cost of acquisition                     $464,000

intangible development cost       116,000

Obligation cost                               92,800

salvage value                               <u> (185,600)</u>

                                                     <u>  487,200</u>

Depletion cost per ton   =  $487,200/4640 tons

                                        =   $105/ton

Depletion expenses for the year = $105 x 812 =  $85,260

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