Question

​O'Keith Company purchased a mine on January​ 1, 2018, for​ $530,000. The mine is estimated to contain​ 37,000 tons of iron ore. There is no residual value. The business extracted and sold​ 2,500 tons of ore in 2018 and​ 19,800 tons of ore in 2019. What is the book value of the mine at the end of​ 2019? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

Answer 1

Answer:

$210,664

Explanation:

The computation of the book value is shown below:

= Purchase cost - sale cost

where,

Purchase cost is $530,000

And, to find the sale cost first we have to determine the cost per ton which is shown below:

Cost per ton = Purchase cost ÷ estimated tons

                     = $530,000 ÷ 37,000 tons

                     = $14.32

Now the sale value of 2,500 tons for 2018 would be

= 2,500 tons × $14.32

= $35,800

And, the sale value of 19,800 tons for 2019 would be

= 19,800 tons × $14.32

= $283,536

Now the total sales cost would be

= $35,800 + $283,536

= $319,336

Now put these values to the above formula  

So, the value would equal to

= $530,000 - $319,336

= $210,664