TinTin Mining TTM purchased a mineral deposit for 2 480 000 in
TinTin Mining (TTM) purchased a mineral deposit for $2,480,000 in June, 2014. In July, TTM spent $120,000 to prepare for the exploitation. The mineral deposit was ready for exploitation on August 1. TTM estimated $1,300,000 ounces of minerals could be economically extracted and sold. On January 2, 2016, TTM spent $62,000 for further development. As a result, TTM estimated an additional 121,000 ounces of minerals could be extracted and sold. The amount of minerals extracted for 2014, 2015, and 2016 are as follows:
Year Ounces
2014..................... 65,000
2015..................... 156,000
2016..................... 180,000
1. Calculate the acquisition cost of the mineral deposit 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 costs 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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