Natural ResourcesTimber Bronson Paper Products purchased 10,000 acres of forested timberland in March 2010. The company paid

Question:

Natural Resources—Timber Bronson Paper Products purchased 10,000 acres of forested timberland in March 2010. The company paid $1,700 per acre for this land, which was above the $800 per acre most farmers were paying for cleared land. During April, May, June, and July 2010, Bronson cut enough timber to build roads using moveable equipment purchased on April 1, 2010. The cost of the roads was $250,000, and the cost of the equipment was $225,000; this equipment was expected to have a $9,000 salvage value and would be used for the next 15 years. Bronson selected the straight-line method of depreciation for the moveable equipment. Bronson began actively harvesting timber in August and by December had harvested and sold 540,000 board feet of timber of the estimated 6,750,000 board feet available for cutting. In March 2011, Bronson planted new seedlings in the area harvested during the winter. Cost of planting these seedlings was $120,000. In addition, Bronson spent $8,000 in road maintenance and $6,000 for pest spraying during calendar-year 2011. The road maintenance and spraying are annual costs. During 2011 Bronson harvested and sold 774,000 board feet of timber of the estimated 6,450,000 board feet available for cutting. In March 2012, Bronson again planted new seedlings at a cost of $150,000, and also spent $15,000 on road maintenance and pest spraying. During 2012, the company harvested and sold 650,000 board feet of timber of the estimated 6,500,000 board feet available for cutting. Compute the amount of depreciation and depletion expense for each of the 3 years (2010, 2011, 2012). Assume that the roads are usable only for logging and therefore are included in the depletion base.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Intermediate Accounting

ISBN: 978-0470423684

13th Edition

Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield

Question Posted: