Question: McKenzie Mining paid 831 600 for the right to extract mineral

McKenzie Mining paid $831,600 for the right to extract mineral assets from a 600,000 tonne mineral deposit. In addition to the purchase price, McKenzie Mining also paid a $600 filing fee, a $2,800 license fee to the province of Quebec, and $65,000 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, McKenzie Mining removed 75,000 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)

Sale on SolutionInn
  • CreatedJuly 08, 2015
  • Files Included
Post your question