Denver Mines paid $625,000 for the right to extract ore from a 250,000-ton mineral deposit. In addition to the purchase price, Denver Mines also paid a $810 filing fee, a $2,000 license fee to the state of Colorado, and $55,390 for a geologic survey of the property. Because the company purchased the rights to the minerals only, it expects the asset to have zero residual value when fully depleted. During the first year of production, Denver Mines removed 48,000 tons of ore, of which it sold 44,000 tons. Make journal entries to record
(a) Purchase of the mineral rights,
(b) Payment of fees and other costs,
(c) Depletion for first-year production,
(d) Sales of ore. Round depletion per unit to the closest cent.

  • CreatedJuly 25, 2014
  • Files Included
Post your question