1. In January 2015, Vorst Co. purchased a mineral mine for $2,820,000 with removable ore estimated at...

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1. In January 2015, Vorst Co. purchased a mineral mine for $2,820,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, Vorst believes it will be able to sell the property for $300,000. During 2015, Vorst incurred $360,000 of development costs preparing the mine for production and removed and sold 60,000 tons of ore. In its 2015 income statement, what amount should Vorst report as depletion?

(a) $135,000

(b) $144,000

(c) $150,000

(d) $159,000

2. Turtle Co. purchased equipment on January 2, 2013, for $50,000. The equipment had an estimated five-year service life with an expected salvage value of $0. Turtle's policy for five-year assets is to use the double-declining-balance depreciation method for the first two years of the asset's life and then switch to the straight-line depreciation method. In its December 31, 2015, balance sheet, what amount should Turtle report as accumulated depreciation for equipment?

(a) $30,000

(b) $38,000

(c) $39,200

(d) $42,000

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
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Intermediate Accounting

ISBN: 978-1133957911

19th edition

Authors: Earl K. Stice, James D. Stice

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