Find similarities and the differences in amortization

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On February 19 of the current year, Rock Chalk Co. pays $4,450,000 for land estimated to contains 5 million tons of recoverable ore. It installs machinery costing $200,000 that has a 16-year life and no salvage value and is capable in mining the ore deposit in 12 years. The machinery is paid for on March 21, eleven days beofre mining operations begin. The company removes and sells 352,000 tons of ore during its first nien months of operation ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandon after the ore is mined.

Prepare entries to record (a) the purchase of the land. (b) the cost and installation of the machinery. (c) the first nine months' depletions assuming the land has a net salvage value of zero after the ore mined, and (d) the first nine months' depreciation on the machinery.

Describe both the similarities and the differences in amortization, depletion, and depreciation.

 

Reference no: EM13509041

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