Question

Golden Gate Mining (GGM) purchased a mineral deposit for $1,350,000 in May, 2014. In June, GGM spent $50,000 to prepare for the exploitation. The mineral deposit was ready for exploitation on July 1. GGM estimated 800,000 ounces of minerals could be economically extracted and sold. On January 2, 2016, GGM spent $80,000 for further development cost. As a result, GGM estimated an additional 110,000 ounces of mineral could be extracted and sold. The amount of mineral extracted for 2014, 2015, and 2016 is as follows:
Year Ounces
2014........................ 72,000
2015........................ 88,000
2016........................ 75,000
Requirements
1. Calculate the acquisition cost of the minerals and record the journal entry for the acquisition in 2014.
2. Record the journal entries for the depletion expense for 2014 and 2015.
3. What is the carrying value for the mineral deposit on December 31, 2015?
4 Record the journal entry for additional development cost in 2016.
5. Calculate the depletion expense for 2016 and record the journal entry for the depletion on December 31, 2016.


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  • CreatedJuly 08, 2015
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