Last Chance Mine (LCM) purchased a coal deposit for $1,597,500. It estimated it would extract 17,750...

Transcribed Image Text:

Last Chance Mine (LCM) purchased a coal deposit for $1,597,500. It estimated it would extract 17,750 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.27 million, $7.3 million, and $6 million for years 1 through 3, respectively. During years 1-3, LCM reported net income (loss) from the coal deposit activity in the amount of ($18,000), $607,500, and $467,500, respectively. In years 1-3, LCM actually extracted 18,750 tons of coal as follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.) Depletion (2)/(1) (1) Tons of Coal Tons Extracted per Year (2) Basis Rate Year 1 Year 2 Year 3 750 ,לב $1,597,500 $90.00 4,200 9,750 4,800 a. What is LCM's cost depletion for years 1, 2, and 3? Year Cost Depletion 1. 2. 3. b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)? Percentage Depletion Year 1 2. c. Using the cost and percentage depletion computations from parts (a) and (b), what is LCM's actual depletion expense for each year? Depletion Expense Year 1 2 3 Last Chance Mine (LCM) purchased a coal deposit for $1,597,500. It estimated it would extract 17,750 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.27 million, $7.3 million, and $6 million for years 1 through 3, respectively. During years 1-3, LCM reported net income (loss) from the coal deposit activity in the amount of ($18,000), $607,500, and $467,500, respectively. In years 1-3, LCM actually extracted 18,750 tons of coal as follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.) Depletion (2)/(1) (1) Tons of Coal Tons Extracted per Year (2) Basis Rate Year 1 Year 2 Year 3 750 ,לב $1,597,500 $90.00 4,200 9,750 4,800 a. What is LCM's cost depletion for years 1, 2, and 3? Year Cost Depletion 1. 2. 3. b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)? Percentage Depletion Year 1 2. c. Using the cost and percentage depletion computations from parts (a) and (b), what is LCM's actual depletion expense for each year? Depletion Expense Year 1 2 3

Answer rating: 100% (QA)

ANSWER a calculation of LMCs cost depletion method Particulars Year 1 Year 2 ... View the full answer