At the time of the eruption obrien had logged 20 of the

Reference no: EM13587334

Conan O'Brien Logging and Lumber Company owns 4,000 acres of timberland on the north side of Mount Leno, which was purchased in 2000 at a cost of $650 per acre. In 2012, O'Brien began selectively logging this timber tract. In May of 2012, Mount Leno erupted, burying the timberland of O'Brien under a foot of ash. All of the timber on the O'Brien tract was downed. In addition, the logging roads, built at a cost of $152,000, were destroyed, as well as the logging equipment, with a net book value of $315,700.

At the time of the eruption, O'Brien had logged 20% of the estimated 550,000 board feet of timber. Prior to the eruption, O'Brien estimated the land to have a value of $230 per acre after the timber was harvested. O'Brien includes the logging roads in the depletion base.

O'Brien estimates it will take 3 years to salvage the downed timber at a cost of $717,500. The timber can be sold for pulp wood at an estimated price of $3 per board foot. The value of the land is unknown, but must be considered nominal due to future uncertainties.

(a) Determine the depletion cost per board foot for the timber harvested prior to the eruption of Mount Leno Depletion cost per board foot?

B. Prepare the journal entry to record the depletion prior to the eruption.

(c) If this tract represents approximately half of the timber holdings of O'Brien, determine the amount of the extraordinary loss due to the eruption of Mount Leno for the year ended December 31, 2012. Extraordinary loss due to the eruption of Mount Leno?

Reference no: EM13587334

Questions Cloud

Calculate the amount of purchase discounts reported by : jackson company reported the following information relating to its inventory for 2007sales revenue

Washing soda is often added to detergent formulations to : washing soda is often added to detergent formulations to make the wash water more basic. what is the formula of the

What should the company establish as the sales price per : what should the company establish as the sales price per unit if it sets a target of earning an operating income of

Updike and patterson investmens inc upi holds equity : updike and patterson investmens inc upi holds equity investments with a cost basis of 250000. upi accounts for these

At the time of the eruption obrien had logged 20 of the : conan obrien logging and lumber company owns 4000 acres of timberland on the north side of mount leno which was

Basic capital budgeting problem with straight line : 1. basic capital budgeting problem with straight line depreciation. the roberts company has cash inflows of 140000 per

If the equilibrium concentrations of co and ch3oh are 118 m : at a certain temperature kc 14.5 for the reactionco g 2h2 g --gtnbsp ch3oh gif the equilibrium concentrations of co

Research a gang intervention program and write a 2 page : research a gang intervention program and write a 2 page summary of the program stating the history mission goals and

What are the factors that pilgrims officials should : pilgrim products inc. buys a controlling interest in the common stock of crestwood corporation. shortly after the

User Account

All Pages