Rogers Mining Company purchased a coal mine for $5,000,000 and expects yield of 8,000,000 tons of coal during the next 10 years. Rogers expenses the coal when sold. What is the gross profit for year 1 if 725,000 of the 940,000 tons extracted is sold for $12 per ton? O $10,692,50O O $8,246,875 O $8,112,500 O $8,200,000

Rogers Mining Company purchased a coal mine for $5,000,000 and expects yield of 8,000,000 tons of coal during the next 10 years. Rogers expenses the coal when sold. What is the gross profit for year 1 if 725,000 of the 940,000 tons extracted is sold for $12 per ton? O $10,692,50O O $8,246,875 O $8,112,500 O $8,200,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 4RE: Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000...

See similar textbooks

Similar questions

Underwoods Miners recently purchased the rights to a diamond mine. It is estimated that there are two million tons of ore within the mine. Underwoods paid $46,000,000 for the rights and expects to harvest the ore over the next fifteen years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 900,000 tons Year 3: 400,000 tons Year 4: 210,000 tons Year 5: 150,000 tons Calculate the depletion expense for the next five years and create the journal entry for year one.
Utica Machinery Company purchases an asset for 1,200,000. After the machine has been used for 25,000 hours, the company expects to sell the asset for 150,000. What is the depreciation rate per hour based on activity?
Montello Inc. purchases a delivery truck for $25,000. The truck has a salvage value of $6,000 and is expected to be driven for 125,000 miles. Montello uses the units-of-production depreciation method, and in year one the company expects the truck to be driven for 26,000 miles; in year two, 30,000 miles; and in year three, 40,000 miles. Consider how the purchase of the truck will impact Montellos depreciation expense each year and what the trucks book value will be each year after depreciation expense is recorded.
Sergei Company purchases land for $4,000,000 from which it expects to extract 2,000,000 tons of coal. The estimated residual value is $400,000, and it mines 80,000 tons of coal in the first year. The unit depletion rate used to determine yearly depletion will be 1. S1.80 per ton. 2. $2.00 per ton. 3. $18.00 per ton. 4. $20.00 per ton.
Maggie Sharrer Company expects to extract 20 million tons of coal from a mine that cost $12 million. Ifno salvage value is expected and 2 million tons are mined in the first year, the entry to record depletion will include a O a. Debit to inventory of $1,200,000 O b. Debit to accumulated depletion of $2,000,000 Oc. Credit to accumulated depletion of $2,000,000 Od. Credit to depletion expense of $1,200,000
ABC firm revealed a large coal mine expected to produce 300 tons of coal. The firm invests $200 000 for mining the coal. They are effective in extracting 30 tons of coal in the first year. Find the depletion expenses or cost? a. $20000 O b. $30000 C. none of these d. $10000
A coal company invests $20 million in a mine estimated to have 25 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1070000 tons of coal are extracted and sold. What is the depletion for the first year? O $85600 O $856000 $256800 O Cannot be determined from the information provided
Petroleum drilling equipment costs a company $125,000. The equipment has an estimated salvage value of $30,000. What is the allowable depreciation for this equipment in year 3? a. $18, 240 b. $19,000 c. $24,000 d. $25,000 A project costs $80,000 initially and will have a $15,000 salvage value after 3 years. The operating cost with this method will be $30,000 in year 1, increasing by $4000 each year. What is the PW of this project? I = 12% a. $12, 338 b. $150, 377 c. $-150,260 d. $2731
K A small company heats its building and spends $8,000 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 8% per year starting one year from now (ie., the first cash flow is $8,640 at EOY one). Their maintenance on the gas furnace is $345 per year, and this expense is expected to increase by 15% per year starting one year from now (i.e., the first cash flow for this expense is $396.75 at the EOY one). If the planning horizon is 13 years, what is the total annual equivalent expense for operating and maintaining the furnace? The interest rate is 18% per year Click the icon to view the interest and annuity table for discrete compounding when /= 8% per year Click the icon to view the interest and annuity table for discrete compounding when = 15% per year. Click the icon to view the interest and annuity table for discrete compounding when / 18% per year. CREYES) The total annual equivalent expense for operating and maintaining the furnace is…
Weston Inc. just agreed to pay $10,000 today, $15,000 at the end of the year, and $25,000 at the end of the next year to a landowner to explore for, but not extract, valuable minerals. If the landowner invests the money at a rate of 10% compounded annually, what is the investment worth two years from today? $36,988.8 $53,600.0 O $65,765.5 O $78,540.4 O $47,452.5
A mineral mining company expects to produce 60, 000 tons of minerals annually for 5 yrs. The deposit cost $150,000 to acquire. Annual gross revenues are expected to be $9/ton. Net revenues are projected to be $4/ton. a. Compute annual depletion on a cost basis b. Compute annual depletion on a percentage basis
Falkland, Inc., is considering the purchase of a patent that has a cost of $51,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual Income and cash flows: Year 3 Year 4 Year 1 Year 2 $5,100 $6,500 17,200 18,700 18,050 14,650 $6,300 $3,000 Net Income Operating cash flows (Click here to see present value and future value tables) A. What is the NPV of the Investment? Round your present value factor three decimal places and final answer to the nearest dollar. B. What happens if the required rate of return Increases? If the required rate of return Increases, the NPV will be lower ✓.