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
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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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