Pensacola company acquired a tract of land containing

Info icon This is a preview. Sign up to view the full content.

28. Pensacola Company acquired a tract of land containing extractable natural resources. Pensacola Company is required by the purchase contract to restore the land to a condition suitable for recreational use upon sale after it has extracted the natural resources. Geological surveys estimate that the recoverable reserves will be 2,500,000 tons and that the extraction will be completed in five years. The following information was gathered for activities related to mining the minerals: Land purchase price 12,000,000 Machinery, equipments and improvements for extraction 6,000,000 Exploration and development costs 5,000,000 Expected cash flows for restoration costs 2,000,000 Residual value 4,000,000 Credit-adjusted risk free interest rate 10% PV of 1 at 8% for 6 periods 0.63 The company extracted 500,000 tons of the minerals in 2015 and sold 400,000 tons. What the amount of depletion to be included in the 2015 statement of comprehensive income?
Image of page 9
Image of page 10
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern