5 In 2009 the company mined and sold 550000 tons of ore and in 2010 it mined

# 5 in 2009 the company mined and sold 550000 tons of

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In 2009 , the company mined and sold 550,000 tons of ore and in 2010, it mined and sold 250,000. Calculate the depletion for each year. (cost – salvage)/units = depletion per unit (\$3,000,000 – 0)/10,000,000 tons = \$0.30/ton 2009 mined and sold 550,000 tons 550,000 tons x \$0.30 = \$165,000 Total depletion for 2009 = \$165,000 2010 mined and sold 250,000 tons 250,000 tons x \$0.30 = \$75,000 Total depletion for 2010 = \$75,000 7. On January 1, 2010 a company sold a machine that had cost \$20,000 and had accumulated 6
depreciation of \$16,000 as of December 31, 2009. The asset had a 5-year life and \$0 salvage value. The company got paid \$5,000. Was that a gain or loss ? How much? The machine was purchased 4 years ago because the \$20,000 with zero salvage over 5 years equals a yearly straight-line depreciation of \$4,000/ year. The company has only depreciated \$16,000 and the book value of the machine is \$4,000 at the time of the sale. Because the sale price of \$5,000 exceeds the book value, the company should record a gain of \$1,000. 7

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