Reference no: EM132421326
Question 1: Frederick Mining Company owns a large parcel of land which costs $1,000,000. It is estimated to contain 1,800,000 tons of recoverable ore. It is estimated that the recovery of the ore will take 10 years and that after the ore is fully depleted the land will be sold for a market value of $150,000. In 2018, Frederick extracted and sold 115,000 tons of ore. What is the amount of depletion that should be recorded? Round total the nearest whole dollar.
Question 2: Bowie Company uses a calendar year and the straight line depreciation method. On December 31, 2018, after adjusting entries were posted, Bowie Company sold a machine which was originally purchased on January 1, 2015. The historical cost was $25,000, the salvage value assumed was $1,000 and the original estimated life was five years.. It was sold for $5,400 cash. Using this information, how much should be recorded on December 31 for the Gain or (Loss)? Round to whole dollars.
Question 3: On January 1, 2017, Frostburg Company purchased for $68,500, equipment having a service life of six years and an estimated residual value of $4,000. Frostburg has recorded depreciation of the equipment using the straight-line method. On December 31, 2019, before making any annual adjusting entries, the equipment was exchanged for new machinery having a fair value of $35,000. The transaction has commercial substance. Use this information to all General Journal entries (without explanation) required to record the events for December 31, 2019.
Question 4: Somerset Company acquired a piece of equipment with a list price of $200,000 for $154,000. Freight to Somerset's location was $5,000. Installation and testing costs were $9,500. An old piece of equipment was scrapped as a result of this new purchase. The old piece of equipment had an undepreciated value (net book value) of $8,000. The new piece of equipment is expected to have a 10 year life and a salvage value of $15,000. What is the total value assigned to the new piece of equipment?
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