Asarco Mining paid $ 398,500 for the right to extract mineral assets from a 200,000 tonne mineral
Question:
Asarco Mining paid $ 398,500 for the right to extract mineral assets from a 200,000 tonne mineral deposit. In addition to the purchase price, Asarco Mining also paid a $ 500 filing fee, a $ 1,000 license fee to the Yukon Territory, and $ 60,000 for a geological survey of the property. Because the company purchased the rights to the minerals only, the company expected the asset to have zero residual value when fully depleted. During the first year, Asarco Mining removed 40,000 tonnes of minerals. Using the Mineral Assets account, make journal entries to record the following:
a. Purchase of the mineral rights
b. Payment of fees and other costs
c. Depletion for the first year (none of the minerals were sold during the year)
Step by Step Answer:
Journal DATE ACCOUNTS POST REF DR CR a MineralAssets 398500 Cash 398500 Purchasedminerals b Mi...View the full answer
Financial Accounting
ISBN: 978-0132889711
1st Canadian Edition
Authors: Jeffrey Waybright, Liang Hsuan Chen, Rhonda Pyper
Related Video
A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit
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