Question

The company owns 9,000 acres of timberland purchased two years ago at a cost of $1,400 per acre. At the time of purchase, the land without the timber was valued at $400 per acre. In the current year, the company built fire lanes and roads, with a life of 30 years, at a cost of $84,000. Every year, the company sprays to prevent disease at a cost of $3,000 per year and spends $7,000 to maintain the fire lanes and roads. During the current year, the company selectively logged and sold 700,000 board feet of timber, of the estimated 3,500,000 board feet. Next year, the company will plant new seedlings to replace the trees cut at a cost of $100,000. What is the cost of timber sold related to depletion during the current year

Answer 1

Answer:

See below

Explanation:

First, we will calculate the depreciation expenses

Depreciation expense = Cost / life = $84,000 / 30 = $2,800 per year