Oriole Paper Products purchased 12,000 acres of forested timberland in March 2025. The company paid $2,040...

 

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Oriole Paper Products purchased 12,000 acres of forested timberland in March 2025. The company paid $2,040 per acre for this land, which was above the $960 per acre most farmers were paying for cleared land. During April, May, June, and July 2025, Oriole cut enough timber to build roads using moveable equipment purchased on April 1, 2025. The cost of the roads was $300,000, and the cost of the equipment was $270,000; this equipment was expected to have a $10,800 salvage value and would be used for the next 15 years. Oriole selected the straight-line method of depreciation for the moveable equipment. Oriole began actively harvesting timber in August and by December had harvested and sold 648,000 board feet of timber of the estimated 8,100,000 board feet available for cutting. In March 2026, Oriole planted new seedlings in the area harvested during the winter. Cost of planting these seedlings was $144,300. In addition, Oriole spent $9,600 in road maintenance and $7,200 for pest spraying during calendar-year 2026. The road maintenance and spraying are annual costs. During 2026, Oriole harvested and sold 928,800 board feet of timber of the estimated 7,740,000 board feet available for cutting. In March 2027, Oriole again planted new seedlings at a cost of $180,000, and also spent $18,000 on road maintenance and pest spraying. During 2027, the company harvested and sold 780,000 board feet of timber of the estimated 7,800,000 board feet available for cutting. Compute the amount of depreciation and depletion expense for each of the 3 years (2025, 2026, and 2027). Assume that the roads are usable only for logging and therefore are included in the depletion base. (Round times cost per board foot to 2 decimal places e.g. 2.55 and final answers to O decimal places, e.g. 45,892.) Oriole Paper Products purchased 12,000 acres of forested timberland in March 2025. The company paid $2,040 per acre for this land, which was above the $960 per acre most farmers were paying for cleared land. During April, May, June, and July 2025, Oriole cut enough timber to build roads using moveable equipment purchased on April 1, 2025. The cost of the roads was $300,000, and the cost of the equipment was $270,000; this equipment was expected to have a $10,800 salvage value and would be used for the next 15 years. Oriole selected the straight-line method of depreciation for the moveable equipment. Oriole began actively harvesting timber in August and by December had harvested and sold 648,000 board feet of timber of the estimated 8,100,000 board feet available for cutting. In March 2026, Oriole planted new seedlings in the area harvested during the winter. Cost of planting these seedlings was $144,300. In addition, Oriole spent $9,600 in road maintenance and $7,200 for pest spraying during calendar-year 2026. The road maintenance and spraying are annual costs. During 2026, Oriole harvested and sold 928,800 board feet of timber of the estimated 7,740,000 board feet available for cutting. In March 2027, Oriole again planted new seedlings at a cost of $180,000, and also spent $18,000 on road maintenance and pest spraying. During 2027, the company harvested and sold 780,000 board feet of timber of the estimated 7,800,000 board feet available for cutting. Compute the amount of depreciation and depletion expense for each of the 3 years (2025, 2026, and 2027). Assume that the roads are usable only for logging and therefore are included in the depletion base. (Round times cost per board foot to 2 decimal places e.g. 2.55 and final answers to O decimal places, e.g. 45,892.)

Answer rating: 100% (QA)

To compute the amount of depreciation and depletion expense for each of the three years 2025 2026 an... View the full answer