Waterway Paper Products purchased 11,900 acres of forested timberland in March 2020. The company paid $2,023...

Waterway Paper Products purchased 11,900 acres of forested timberland in March 2020. The company paid $2,023 per acre for this land, which was above the $952 per acre most farmers were paying for cleared land. During April, May, June, and July 2020, Waterway cut enough timber to build roads using moveable equipment purchased on April 1, 2020. The cost of the roads was $290,100, and the cost of the equipment was $267,750; this equipment was expected to have a $10,710 salvage value and would be used for the next 15 years. Waterway selected the straight-line method of depreciation for the moveable equipment. Waterway began actively harvesting timber in August and by December had harvested and sold 642,600 board feet of timber of the estimated 8,032,500 board feet available for cutting. In March 2021, Waterway planted new seedlings in the area harvested during the winter. Cost of planting these seedlings was $142,800. In addition, Waterway spent $9,520 in road maintenance and $7,140 for pest spraying during calendar-year 2021. The road maintenance and spraying are annual costs. During 2021, Waterway harvested and sold 921,060 board feet of timber of the estimated 7,675,500 board feet available for cutting. In March 2022, Waterway again planted new seedlings at a cost of $178,500, and also spent $17,850 on road maintenance and pest spraying. During 2022, the company harvested and sold 773,500 board feet of timber of the estimated 7,735,000 board feet available for cutting. Compute the amount of depreciation and depletion expense for each of the 3 years (2020, 2021, and 2022). Assume that the roads are usable only for logging and therefore are included in the depletion base.

Expert Solution

ekkarill92 answered 2 years ago

Sweet Paper Products purchased 10,700 acres of forested timberland in March 2017. The company paid $1,819...

Sweet Paper Products purchased 10,700 acres of forested timberland in March 2017. The company paid $1,819 per acre for this land, which was above the $856 per acre most farmers were paying for cleared land. During April, May, June, and July 2017, Sweet cut enough timber to build roads using moveable equipment purchased on April 1, 2017. The cost of the roads was $267,500, and the cost of the equipment was $240,750; this equipment was expected to have a $9,630...

Bramble Company owns 9,000 acres of timberland purchased in 2009 at a cost of $1,596 per...

Bramble Company owns 9,000 acres of timberland purchased in 2009 at a cost of $1,596 per acre. At the time of purchase, the land without the timber was valued at $456 per acre. In 2010, Bramble built fire lanes and roads, with a life of 30 years, at a cost of $95,760. Every year, Bramble sprays to prevent disease at a cost of $3,420 per year and spends $7,980 to maintain the fire lanes and roads. During 2011, Bramble selectively...

Bramble Company owns 9,000 acres of timberland purchased in 2006 at a cost of $1,540 per...

Bramble Company owns 9,000 acres of timberland purchased in 2006 at a cost of $1,540 per acre. At the time of purchase, the land without the timber was valued at $440 per acre. In 2007, Bramble built fire lanes and roads, with a life of 30 years, at a cost of $92,400. Every year, Bramble sprays to prevent disease at a cost of $3,300 per year and spends $7,700 to maintain the fire lanes and roads. During 2008, Bramble selectively...

The cost of equipment purchased by Waterway, Inc., on June 1, 2020, is $102,900. It is...

The cost of equipment purchased by Waterway, Inc., on June 1, 2020, is $102,900. It is estimated that the machine will have a $10,500 salvage value at the end of its service life. Its service life is estimated at 7 years, its total working hours are estimated at 46,200, and its total production is estimated at 616,000 units. During 2020, the machine was operated 7,200 hours and produced 66,000 units. During 2021, the machine was operated 6,600 hours and produced...

Crane Enterprises purchased equipment on March 15, 2018, for $81,030. The company also paid the following...

Crane Enterprises purchased equipment on March 15, 2018, for $81,030. The company also paid the following amounts: $550 for freight charges; $219 for insurance while the equipment was in transit; $1,690 for a one-year insurance policy; $2,012 to train employees to use the new equipment; and $2,521 for testing and installation. The equipment was ready for use on April 1, but the company did not start using it until May 1. Crane has estimated the equipment will have a 10-year...

Oriole Enterprises purchased equipment on March 15, 2018, for $68,620. The company also paid the following...

Oriole Enterprises purchased equipment on March 15, 2018, for $68,620. The company also paid the following amounts: $500 for freight charges; $193 for insurance while the equipment was in transit; $1,828 for a one-year insurance policy; $2,127 to train employees to use the new equipment; and $2,527 for testing and installation. The equipment was ready for use on April 1, but the company did not start using it until May 1. Oriole has estimated the equipment will have a 10-year...

A company purchased $11,900 of merchandise on June 15 with terms of 2/10, n/45, and FOB...

A company purchased $11,900 of merchandise on June 15 with terms of 2/10, n/45, and FOB shipping point. The freight charge, $1,450, was added to the invoice amount. On June 20, it returned $2,320 of that merchandise. On June 24, it paid the balance owed for the merchandise taking any discount it is entitled to. The cash paid on June 24 equals:

1.) On March 1, 2020, Jefferson Company purchased factory equipment with an invoice price of $90,000....

1.) On March 1, 2020, Jefferson Company purchased factory equipment with an invoice price of $90,000. Other costs incurred were freight costs, $2,100; installation wiring and foundation, $2,200; material and labor costs in testing equipment, $700; oil lubricants and supplies to be used with equipment during the life of the asset, $500; fire insurance policy covering equipment for three years, $1,400. The equipment is estimated to have a $5,000 salvage value at the end of its 8-year useful service life....

Geddie Products purchased a machine for $60,000 on July 1, 2020. The company estimates that the...

Geddie Products purchased a machine for $60,000 on July 1, 2020. The company estimates that the useful life of the asset is 4 years, and its life in hours = 10,000 hours. The estimated salvage value is 0. During 2020, the hours used were 1,250 hours. 1) Calculate the Depreciable Base and the depreciation expense of 2020 using the Straight-line method 2) Calculate the depreciation expense of 2020 using the double-declining balance method 3) Calculate the depreciation expense of 2021...

Green Acres Farms just purchased a tractor on January 1, 2020. The total purchase price (cost)...

Green Acres Farms just purchased a tractor on January 1, 2020. The total purchase price (cost) was $600,000. They expect to use the tractor for 5 years and sell for $100,000. Assume according to MACRS, they can depreciate tractors for 3 years using 150% declining balance. Complete the following depreciation questions. PART A Fill in the economic depreciation table using the straight-line method. Year Remaining value at beginning of year Depreciation Remaining value at end of year 2020 [Q30] [Q31]...

Question