The accumulated depletion account is
a. an expense account.
b. reported on the income statement as other expenses.
c. an intangible asset account.
d. reported on the balance sheet as a deduction from the cost of the mineral deposit.
The accumulated depletion account is
a. an expense account.
b. reported on the income statement as other expenses.
c. an intangible asset account.
d. reported on the balance sheet as a deduction from the cost of the mineral deposit.
Related questions
Depletion
On January 2, 2016, Whistler Company purchased land for$450,000, from which it is estimated that 400,000 tons of ore couldbe extracted. It estimates that the present value of the costnecessary to restore the land is $80,000, after which it could besold for $30,000.
During 2016, Whistler mined 80,000 tons and sold 50,000 tons.During 2017, Whistler mined 100,000 tons and sold 120,000 tons. Atthe beginning of 2018, Whistler spent an additional $100,000, whichincreased the reserves by 60,000 tons. In 2018, Whistler mined140,000 tons and sold 130,000 tons. Whistler uses a FIFO cost flowassumption.
Required:
If required, round your final answers to the nearest dollar andround the depletion rate per ton to the nearest cent.
1. Calculate the depletion included in the income statement andending inventory for 2016, 2017, and 2018.
| 2016 | Depletion deducted from income | $ | |
| Depletion included in inventory | $ | ||
| 2017 | Depletion deducted from income | $ | |
| Depletion included in inventory | $ | ||
| 2018 | Depletion deducted from income | $ | |
| Depletion included in inventory | $ |
2. Complete the natural resources section of the balance sheeton December 31, 2016, 2017, and 2018, assuming that an accumulateddepletion account is used.
| WHISTLERCOMPANY | ||
| Balance Sheet(partial) | ||
| December 31,2015 - 2018 | ||
| December 31, 2016 | ||
| Mineral ore resources | $ | |
| Less: Accumulated depletion | ||
| $ | ||
| December 31, 2017 | ||
| Mineral ore resources | $ | |
| Less: Accumulated depletion | ||
| $ | ||
| December 31, 2018 | ||
| Mineral ore resources | $ | |
| Less: Accumulated depletion | ||
| $ | ||
3. Assume Whistler's discount rate was 8%. What is the balancein the asset retirement obligation at 2016, 2017, and 2018?
| WHISTLERCOMPANY | |
| Assetretirement obligation | |
| 2016 -2018 | |
| December 31, 2016 | $ |
| December 31, 2017 | $ |
| December 31, 2018 | $ |
1) Which of the following would indicate poor internal controlover accounts receivable?
| The same person handling cashreceipts also records the accounts receivable transactions. | |
| The person handling cash receiptspasses the receipts to someone who enters them into accountsreceivable. | |
| The mailroom employees open themail and give the cash receipts to another employee. | |
| The person who handles accountsreceivable would not write off accounts as uncollectible. |
2) Accumulated depletion is a(n)
| contra-asset account. | |
| cash account. | |
| contra-liability account. | |
| expense account. |
3) Allied Industries reported net income of $52,000,depreciation expenses of $13,000, a gain on a land sale of $3,000,and a decrease in accounts receivable of $1,500. Under the indirectmethod, net cash flows from operations is
| $63,500. | |
| $66,500. | |
| $69,500. | |
| $60,555. |
