Free port McMo Ran Copper & Gold Inc., headquartered in Phoenix. Arizona. is one of the world’s largest copper. gold, and molybdenum mining and production companies, with its principal asset in natural resource reserves (approximately 119.7 billion pounds of copper, 33.9 million ounces of gold. 3.42 billion pounds of molybdenum, 330.3 million ounces of silver, and 0.86 billion pounds of cobalt. as of the end of 2011). Its annual revenues exceed $20.8 billion. Assume that in February 2015. Freeport-McMoRan paid $800,000 for a mineral deposit in Indonesia. During March, it spent 870.000 in preparing the deposit for exploitation. It was estimated that 1.000.000 total cubic yards could be extracted economically. During 2015, 60,000 cubic yards were extracted. During January 2016, the company spent another $6000 for additional developmental work that increased the estimated productive capacity of the mineral deposit.

Required:

1. Compute the acquisition cost of the deposit in 2015.

2. Compute depletion for 2015.

3. Compute the net book value of the deposit after payment of the January 2016 developmental costs.

Answer rating: 100% (QA)

Req 1 Computation of acquisition cost of the deposit ... View the full answer