ABC Company purchased a mine in 2017 for $3,400,000. It was estimated that the mine contained...

ABC Company purchased a mine in 2017 for $3,400,000. It was estimated that the mine contained 200,000 tons of ore and that the mine would be worthless after all of the ore was extracted. The company extracted 25,500 tons of ore in 2017 and 30,000 tons of ore in 2018. In 2017, ABC Company sold 22,000 tons of ore. In 2018, the company sold 15,000 tons of ore. What is book value of the mine at December 31, 2018

Expert Solution

$ 2,456,500

Calculations:

Amortization rate (as per Units of production method) = (Cost - salvage value) / Total expected units

A	Cost	$ 3,400,000
B	Residual / Salvage Value	$ -
C	Expected Numer of units	200,000

(A-B)/C	Depreciation Rate	$ 17.00

Now,

Year	Expected ouput	Value at the beginning	Depreciation every year	Accumulated depreciation	Value at the end
1	25,500	$ 3,400,000	$ 433,500	$ 433,500	$ 2,966,500
2	30,000	$ 2,966,500	$ 510,000	$ 943,500	$ 2,456,500

In case of any doubt or clarification, you're welcome to come back via comments.

ekkarill92 answered 2 years ago

In 2019, ABC purchased a silver mine for $10,200,000 with removable silver estimated at 1,000,000 tons....

In 2019, ABC purchased a silver mine for $10,200,000 with removable silver estimated at 1,000,000 tons. ABC is required to mitigate environmental damage after mining the silver and expects to spend $5,105,126.25 five years from now in order to do so. ABC’s cost of capital for similar investments is 5%. The property has an estimated value of $500,000 after the gold has been extracted. The company incurred $2,500,000 of intangible development costs getting the mine up and running. During 2019,...

ABC, Inc. purchased for $3,800,000 a mine estimated to contain 2.5 million tons of ore. When...

ABC, Inc. purchased for $3,800,000 a mine estimated to contain 2.5 million tons of ore. When the ore is completely extracted, it was expected that the land would be worth $200,000. A building and equipment costing $1,800,000 were constructed on the mine site, and they will be completely used up and have no salvage value when the ore is exhausted. During the first year, 750,000 tons of ore were mined, and $300,000 was spent for labor and other operating costs....

Salter mining Company purchased the Northern Tier Mine for $42 million cash. The mine was estimated...

Salter mining Company purchased the Northern Tier Mine for $42 million cash. The mine was estimated to contain 9.7 million tons of ore and to have a residual value of $1.1 million. During the first year of mining operations at the Northern Tier Mine, 60000 tons of ore were mined of which 14000 tons were sold a) preys journal to record depletion during the year B) Show how the Northern Tier Mine and it’s accumulated depletion would appear in Salter...

Salter Mining Company purchased the Northern Tier Mine for $34 million cash. The mine was estimated...

Salter Mining Company purchased the Northern Tier Mine for $34 million cash. The mine was estimated to contain 2.56 million tons of ore and to have a residual value of $1.6 million. During the first year of mining operations at the Northern Tier Mine, 80,000 tons of ore were mined, of which 12,000 tons were sold. a. Prepare a journal entry to record depletion during the year. b. Show how the Northern Tier Mine, and its accumulated depletion, would appear...

On January 1st, 2019, ABC Inc. purchased a copper mine for $400,000. The company is required...

On January 1st, 2019, ABC Inc. purchased a copper mine for $400,000. The company is required by provincial law to restore the land on which the mine is located to its initial condition at the end of the mine's ten year useful life. Restoration costs are estimated to be $35,000. ABC is subject to an interest rate of 5%. ABC Inc uses straight line deprecation and follows IFRS. Required Prepare the journal entries required on January 1st and December 31st,...

Depletion On July 1, 2019, Amplex Company purchased a coal mine for $2 million. The estimated...

Depletion On July 1, 2019, Amplex Company purchased a coal mine for $2 million. The estimated capacity of the mine was 800,000 tons. During 2019, Amplex mines 10,000 tons of coal per month and sells 9,000 tons per month. The selling price is $30 per ton and production costs (excluding depletion and depreciation) are $8 per ton. At the end of the mine's life, Amplex estimates that the present value of the cost to restore the land is $300,000, after...

Mont Mining Co. purchased for 10,630,400 a mine that is estimated to have 48,320,000 tons of...

Mont Mining Co. purchased for 10,630,400 a mine that is estimated to have 48,320,000 tons of ore and no salvage value. In the first year, 6,440,000 tons of ore are extracted. show how this mine is reported on the balance sheet at the end of the year

1. Jalloh Company purchased machinery for $162,000 on January 1, 2017. It is estimated that the...

1. Jalloh Company purchased machinery for $162,000 on January 1, 2017. It is estimated that the machinery will have a useful life of 20 years, salvage value of $15,000, production of 84,000 units, and working hours of 42,000. During 2017, the company uses the machinery for 14,300 hours, and the machinery produces 20,000 units. Compute depreciation under the straight-line, unit of output, working hours, sum of the year’s digits, and double-declining balance methods.

Adelphi Company purchased a machine on January 1, 2017, for $90,000. The machine was estimated to...

Adelphi Company purchased a machine on January 1, 2017, for $90,000. The machine was estimated to have a service life of ten years with an estimated residual value of $5,000. Adelphi sold the machine on January 1, 2021 for $30,000. Adelphi uses the double declining method for depreciation. Using this information, how much is the gain or (loss) for the equipment sale entry made on January 1, 2021. Enter a loss as a negative number.

Shamrock Company purchased machinery on January 1, 2017, for $ 97,600. The machinery is estimated to...

Shamrock Company purchased machinery on January 1, 2017, for $ 97,600. The machinery is estimated to have a salvage value of $ 9,760 after a useful life of 8 years. 1. Compute 2017 depreciation expense using the sum-of-the-years'-digits method. 2.Compute 2017 depreciation expense using the sum-of-the-years'-digits method, assuming the machinery was purchased on April 1, 2017.

Question