5156

  1. Depletion

  2. On January 2, 2016, Spring Company purchased land for $470,000, from which it is estimated that 400,000 tons of ore could be extracted. It estimates that the present value of the cost necessary to restore the land is $73,000, after which it could be sold for $38,000.

  3. During 2016, Spring mined 78,000 tons and sold 53,000 tons. During 2017, Spring mined 99,000 tons and sold 104,000 tons. At the beginning of 2018, Spring spent an additional $90,000, which increased the reserves by 61,000 tons. In 2018, Spring mined 140,000 tons and sold 150,000 tons. Spring uses a FIFO cost flow assumption.

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    Required:

    1. Calculate the depletion included in the income statement and ending inventory for 2016, 2017, and 2018. Round the depletion rate to the nearest cent. If required, round the final answers to the nearest dollar.

  4. 2. Complete the natural resources section of the balance sheet on December 31, 2016, 2017, and 2018, assuming that an accumulated depletion account is used. Round the depletion rate per to the nearest cent. If required, round the final answers to the nearest dollar.</liclass=”itemcontentelement>