Flossil Fossils Company purchased a tract of land containing coal in 2013 for $20,000,000 and then spent $30,000,000 to get a mine ready for operation.The company estimates that there will be 10,000,000 tons of coal available over the next 10 years.The land has a residual value of $500,000.During 2013,1,000,000 tons of coal were mined.
A) Compute the cost of the natural resource and the depletion rate.
B) Record the jounnal entry for the 2013 depletion.

Question

Flossil Fossils Company purchased a tract of land containing coal in 2013 for $20,000,000 and then spent $30,000,000 to get a mine ready for operation.The company estimates that there will be 10,000,000 tons of coal available over the next 10 years.The land has a residual value of $500,000.During 2013,1,000,000 tons of coal were mined.
 A) Compute the cost of the natural resource and the depletion rate.
B) Record the jounnal entry for the 2013 depletion.

Quizplus · Accepted Answer

The Answer of Flossil Fossils Company purchased a tract of land containing coal in 2013 for $20,000,000 and then spent $30,000,000 to get a mine ready for operation.The company estimates that there will be 10,000,000 tons of coal available over the next 10 years.The land has a residual value of $500,000.During 2013,1,000,000 tons of coal were mined.
 A) Compute the cost of the natural resource and the depletion rate.
B) Record the jounnal entry for the 2013 depletion.

Flossil Fossils Company Purchased a Tract of Land Containing Coal