Reference no: EM132742233
Problem - DD Company was engaged in the rock and gravel business. The following transactions relate to the acquisition and development of an extensive gravel pit:
2019
Cost of acquisition and development 960,000
Estimated output 2,400,000 tons
Production 1,000,000 tons
2020
Additional development cost 490,000
Production 600,000 tons
2021
Additional development cost 500,000
New estimate of remaining output 2,500,000 tons
Production 700,000 tons
REQUIRED -
1. Compute for the carrying amount of the asset for the year ending 2019, 2020, and 2021.
2. Compute for the depletion expense for the year ending 2019, 2020, and 2021.