Winter Mountain Mining paid $448,500 for the right to extract mineral assets from a 500,000-ton deposit. In
Question:
Winter Mountain Mining paid $448,500 for the right to extract mineral assets from a 500,000-ton deposit. In addition to the purchase price, Winter Mountain Mining also paid a $500 filing fee, a $1,000 license fee to the state of Colorado, and $60,000 for a geological survey of the property. Because Winter Mountain Mining purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year, Winter Mountain Mining removed and sold 50,000 tons of the minerals. Make journal entries to record
(a) Purchase of the minerals (debit Minerals),
(b) Payment of fees and other costs,
(c) Depletion for the first year.
Step by Step Answer:
Horngrens Financial And Managerial Accounting The Financial Chapters
ISBN: 9780137858651
8th Edition
Authors: Tracie Miller Nobles, Brenda Mattison