A sand and gravel pit purchased for $900,000 is expected to yield 50,000 tons of gravel and

Question:

A sand and gravel pit purchased for $900,000 is expected to yield 50,000 tons of gravel and 80,000 tons of sand per year. The gravel will sell for $6 per ton and the sand for $9 per ton.

(a) Determine the depletion charge according to the percentage depletion method. The percentage depletion rate for sand and gravel is 5%.

(b) If taxable income is $100,000 for the year, is this depletion charge allowed? If not, how much is allowed?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Engineering economy

ISBN: 978-0073376301

7th Edition

Authors: Leland Blank, Anthony Tarquin

See More Books

Question Posted: Dec 17, 2012 06:32 AM

See More Questions

An investment opportunity costing $85,000 is expected to yield net cash flows of $15,000 annually over six years. A: Calculate the Net Present Value of the investment at a discount rate of 12% B:...
An invest opportunity costing $85,000 is expected to yield net cash flows of $25,000 annually for five years. If the cost of capital is 12% the net present value of the investment is _____ The...
B Ltd purchased an asset for $200 000 on 1 July 2015. This asset has a five year life and is depreciated straight line for both accounting and taxation purposes. B Ltd sold this asset to A Ltd on 1...
The tasks must you complete as part of building the subledger applications while implementing Oracle Accounting Hub Cloud? Explain.
By integrating the spherical-coordinates differential volume element d over appropriate limits, verify the formula 4/3 R3 for the volume of a sphere of radius R.
Under the influence of its drive force, a snowmobile is moving at a constant velocity along a horizontal patch of snow. When the drive force is shut off, the snowmobile coasts to a halt. The...
Table B. 14 contains data on the transient points of an electronic inverter. Using only the regressors $x_{1}, \ldots, x_{4}$, fit a multiple regression model to these data. a. Investigate the...
Two independent methods of forecasting based on judgment and experience have been prepared each month for the past 10 months. The forecasts and actual sales are as follows: a. Compute the MSE and MAD...
Staples sells CDs ( $ 2 , 0 0 ) and box s of computer Paper ( $ 3 ) . If total sales Were $ 1 , 5 6 0 and customers bought 5 times as many CDs as boxes of compute paper how many obs were sold?,
Copper Strike Mining Company (CSMC) needs to raise $55,000,000 for the development of a new mining site and will do so by issuing either new bonds or new preferred shares. If CSMC issues preferred...
NA Forest Resources purchased forest acreage for $500,000 from which an estimated 200 million board feet of lumber is recoverable. The company will sell the lumber for $0.10 per board foot. No lumber...
Vesco Mineral Resources purchased mineral rights to land in the foothills of the Santa Cristo mountains. The cost of the purchase was $9 million. Vesco originally thought that it would be able to...
The debits and credits from two transactions are presented in the following customer account:NAME Airwave Communications Inc.ADDRESS 76 Oak Ridge Rd. Describe each transaction and the source of...
PepsiCo, Inc., is regarded as the second largest food and beverage business in the world, and a large part of its success can be attributed to its leader. Indra Nooyi, who served as the chairperson...
Distinguish between expenditures and expenses.
What is the structure of a balance sheet?
What is the purpose of modelling in business administration research?
How are income statements structured?
(a) How many license plates are possible if the first three places are occupied by letters and the last three by numbers? (b) Assuming all combinations are equally likely, what is the probability...
Suppose that the electrical potential at the point (x, y, z) is E(x, y, z) = x + y - 2z. What is the direction of the acceleration at the point (1,3,2)?
Find the LT of $x(t)=u(t+1)+u(t-1)$ and its ROC.
Examine the financial pages of your newspaper (or the Wall St. Journal) and determine the current interest rate on the following securities, and explain why the interest rates are different for these...
Consider four mutually exclusive alternatives: Each alternative has a 10-year usefu11ife and no salvage value . Over what range of interest rates is C the preferred alternative A B Initial cost $100...
Frequently we read in the newspaper that one should lease an automobile rather than buying it. For a typical 24-month lease on a car costing $9400, the monthly lease charge is about $267. At the end...
York's outstanding stock consists of 80,000 shares of cumulative 7.5% preferred stock with a $5 par value and also 200,000 shares of common stock with a $1 par value. During its first four years of...
Hudson Community College enrolls students in two departments, Liberal Arts and Sciences. The college also has two service departments, the Library and the Computing Services Department. The usage of...
Robert is designing a new Active Directory Domain Services infrastructure for a company called Litware, Inc., which has its headquarters in New York and two additional offices in London and Tokyo....

A sand and gravel pit purchased for $900,000 is expected to yield 50,000 tons of gravel and

Question:

Step by Step Answer:

a Income 500006 800009 1020...View the full answer

Engineering economy

Students also viewed these Economics questions