During 2014, a company purchased a mine at a cost of $4,416,000.The company spent an additional $780,000 getting the mine ready forits intended use. It is estimated that 480,000 tons of mineral canbe removed from the mine and the residual value of the mine will be$780,000. During 2014, 63,000 tons of mineral were removed from themine and 53,000 tons were sold. Which of the following statementsis incorrect with respect to the accounting for the mine?
A. The book value of the mine decreased $579,600 during2014.
B. The inventory of minerals was $92,000 at December 31,2014.
C. The 2014 cost of goods sold was $487,600.
D.The book value of the mine on December 31, 2014 was$3,836,400.
During 2014, a company purchased a mine at a cost of $4,416,000.The company spent an additional $780,000 getting the mine ready forits intended use. It is estimated that 480,000 tons of mineral canbe removed from the mine and the residual value of the mine will be$780,000. During 2014, 63,000 tons of mineral were removed from themine and 53,000 tons were sold. Which of the following statementsis incorrect with respect to the accounting for the mine?
A. The book value of the mine decreased $579,600 during2014.
B. The inventory of minerals was $92,000 at December 31,2014.
C. The 2014 cost of goods sold was $487,600.
D.The book value of the mine on December 31, 2014 was$3,836,400.
Related questions
In 2013, the Marion Company purchased land containing a mineralmine for $1,900,000. Additional costs of $753,000 were incurred todevelop the mine. Geologists estimated that 460,000 tons of orewould be extracted. After the ore is removed, the land will have aresale value of $100,000. | |||
To aid in the extraction, Marion built various structures andsmall storage buildings on the site at a cost of $186,300. Thesestructures have a useful life of 10 years. The structures cannot bemoved after the ore has been removed and will be left at the site.In addition, new equipment costing $86,800 was purchased andinstalled at the site. Marion does not plan to move the equipmentto another site, but estimates that it can be sold at auction for$4,000 after the mining project is completed. | |||
| In 2013, 56,000 tons of ore were extracted and sold. In 2014,the estimate of total tons of ore in the mine was revised from460,000 to 547,500. During 2014, 86,000 tons were extracted, ofwhich 66,000 tons were sold. 1. Compute depletion and depreciation of the mine and the miningfacilities and equipment for 2013 and 2014. Marion uses theunits-of-production method to determine depreciation on miningfacilities and equipment
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