Question

I don't understand how to do these:

1. Whittle, Inc., purchased the timber rights for $6,000,000 at the beginning of Year 1. It is expected to produce a total of 8,000,000 cords of wood over 4 years, after which it will be sold for $1,000,000. In Year 1, it cut 110,000 cords of wood. How much Depletion Expense should be recorded in Year 1 using the activity method?

2. On-A-Roll, Inc., bought machinery at a cost of $21,000 with a salvage value of $3,000 and useful life of 10 years. Calculate Depreciation Expense on the income statement for the year ended Year 2 using the straight-line method.

ROUND ANSWER TO NEAREST DOLLAR. DO NOT INCLUDE $, NEGATIVE SIGN, OR PARENTHESES IN YOUR ANSWER

3. French Confection, Inc., bought machinery at a cost of $83,000 at the beginning of Year 1. If its salvage value is $9,000 and its useful life is 10 years, what will the Depreciation Expense be for the second year if the straight-line method is used?

Answer 1

Please give positive ratings so I can keep answering. It would help me a lot. Please comment if you have any query. Thanks!

Whittle, Inc.
Units of activity method	Amount $	Note
Cost of timber rights	6,000,000.00
Less: Residual Value	1,000,000.00
Depreciable Value	5,000,000.00	A
Total cords over life	8,000,000.00	B
Depletion per cord	0.625	C=A/B
Cords cut in year 1	110,000.00	D
Depletion Expense for year 1	68,750.000	E=D*C
		Note
On-A-Roll, Inc.
Straight Line Method	Amount $
Cost of machinery	21,000.00
Less: Residual Value	3,000.00
Depreciable Value	18,000.00	F
Estimated life	10.00	G
Annual Depreciation	1,800.000	H=F/G
Depreciation Expense for year 2	1,800.000	See H
French Confection, Inc.
Straight Line Method	Amount $
Cost of machinery	83,000.00
Less: Residual Value	9,000.00
Depreciable Value	74,000.00	I
Estimated life	10.00	J
Annual Depreciation	7,400.000	K=I/J
Depreciation Expense for year 2	7,400.000	See K