Mr. Gates bought an interest in zinc ore assets for $45,000. It was estimated that the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Mr. Gates bought an interest in zinc ore assets for $45,000. It was estimated that the recoverable amount of zinc ore was 22,000 lbs. In the first year of operation, Mr. Gates received gross income of $18,000 from the sale of 1,200 lbs. of zinc ore recovered in the first year. He incurred expense of $1,500 to recover the ore. % depletion allowance applicable to zinc ore is 22% of gross income. Also, the % depletion allowance cannot exceed 50% of taxable income computed without the depletion deduction. Compute Mr. Gates' depletion allowance for the year. (Hint: Cost of Depletion in the first year is the original cost prorated by the percentage of the ore recovered in the first year to the total recoverable ore amount. Taxable income is gross income less expenses. Then choose between i) the cost of depletion and ii) the permissible % depletion allowance.) Mr. Gates bought an interest in zinc ore assets for $45,000. It was estimated that the recoverable amount of zinc ore was 22,000 lbs. In the first year of operation, Mr. Gates received gross income of $18,000 from the sale of 1,200 lbs. of zinc ore recovered in the first year. He incurred expense of $1,500 to recover the ore. % depletion allowance applicable to zinc ore is 22% of gross income. Also, the % depletion allowance cannot exceed 50% of taxable income computed without the depletion deduction. Compute Mr. Gates' depletion allowance for the year. (Hint: Cost of Depletion in the first year is the original cost prorated by the percentage of the ore recovered in the first year to the total recoverable ore amount. Taxable income is gross income less expenses. Then choose between i) the cost of depletion and ii) the permissible % depletion allowance.)
Expert Answer:
Answer rating: 100% (QA)
ANSWER Solution the As the question is related to Depletion Allowance for the year Cast of Deple... View the full answer
Related Book For
Posted Date:
Students also viewed these accounting questions
-
In a government report in 2012,1 it was estimated that Air Force One costs the taxpayers $ 179,750 per hour. Air Force One is a custom- built Boeing 747 for the presidents use while in office. (There...
-
In a past presidential election, it was estimated that the probability that the Republican candidate would be elected was 2/5, and therefore the probability that the Democratic candidate would be...
-
It was estimated that 30% of all seniors on a campus were seriously concerned about employment prospects, 25% were seriously concerned about grades, and 20% were seriously concerned about both. What...
-
Lets assume you have been offered a job by Jekyll Corporation, a company in the consumer products industry. The job is in your chosen career path. Jekyll Corporation has offered you a position that...
-
Based on the data in Exercise 4-24, prepare the adjusting entries for Alert Security Services Co. In Exercise 4-24, Alert Security Services Co. offers security services to business clients. The trial...
-
In 2018 Dutch-Belgian food retailer Ahold-Delhaize had a return on equity of 12 percent, whereas France-based Groupe Casinos return was only 2 percent. Use the decomposed ROE framework to provide...
-
The Doak Company uses prenumbered vouchers. During a given test period, voucher numbers 1000 to 8000 were used. Required: a. Select the first five vouchers to be included in a random sample in each...
-
Vassar Corp. has incurred substantial losses for several years and has decided to declare bankruptcy. The company petitioned the court for protection from creditors on March 31, 2010, and submitted...
-
You are a manager who is in charge of a team that has been given the task of introducing a new management reporting system into regional offices. There is considerable resistance to the changes from...
-
Katie Scarlett is analyzing the 15-unit apartment building for a client for possible purchase. She expanded her analysis from just the DCF (Income) to include the Direct Cap (Income), the Cost and...
-
Which of the following statement is not true? Let G be a non abelian group and a.beG such such that 0(a)= m, 0 (b)=n. Then it is necessary that Ece G such that o(c)=1.c.m(0(a).a(b)) The number of...
-
In the figure, six charged particles surround particle 7 at radial distances of either d = 28.0 cm or 2d, as drawn. The charges are q1 = +52e, q2 = +44e, q3 = +26e, q4 = +104e, q5 = +22e, q6 = +88e,...
-
Your uncle Mikes boat can travel 4.0 m/s in still water. One sunny afternoon, you and Unk Mike decide to go fishing. While waiting for a bite, you begin thinking, If this river is flowing at 5.5 m/s...
-
2. A 2.0 m-long 1.0 kg rod is hinged at one end and connected to a wall. It is held out horizontally and then released. What is the speed of the tip of the rod when it hits the wall? Hinge Before:...
-
Greg spends all of his income on sandwiches and shoes. Suppose that the government introduces an ad valorem tax of 60% imposed on both sandwiches and shoes. What income tax rate is equivalent to this...
-
Imagine two bored online classmates, Taylor and Adam are playing a "poke and tell" game. Taylor can poke (P) Adam or not (N) and Adam can tattle (T) on Taylor or keep quiet (Q). If Taylor hits Adam...
-
When preparing to interview with a potential externship site or employer, it is important to have some questions prepared. Asking questions about the business or position shows you have done your...
-
Audrey purchases a riding lawnmower using a 2-year, no-interest deferred payment plan at Lawn Depot for x dollars. There was a down payment of d dollars and a monthly payment of m dollars. Express...
-
Expenditures may be classified by function, activity, object, or organizational unit. Give an example of each classification for a municipality. Which classification is the most appropriate for...
-
Discuss the three basic assumptions necessary for calculating a safe cash distribution. How is this safe cash distribution computed?
-
Explain how a parent company that owns less than 100% of a subsidiary can purchase an entire new issue of common stock directly from the subsidiary.
-
Liquefaction can be achieved through (a) Expansion of gas through a work-producing device (isentropic expansion) (b) Joule-Thomson expansion (isenthalpic expansion) (c) Exchange of heat at constant...
-
To estimate the Ozone Depletion Potential of a refrigerant (a) \(\mathrm{CFC}-11\) is used as a reference gas (b) \(\mathrm{CFC}-12\) is used as a reference gas (c) \(\mathrm{CO}_{2}\) is used as a...
-
To compute the Global Warming Potential of a refrigerant (a) HFC-134a is used as a reference gas (b) Hydrocarbon is used as a reference gas (c) \(\mathrm{CO}_{2}\) is used as a reference gas (d)...
Study smarter with the SolutionInn App