On April 2, 2018, Montana Mining Co. pays $3,721,000 for an ore deposit containing 1,525,000 tons. The company installs machinery in the mine costing $213,500, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Montana begins mining on May 1, 2018, and mines and sells 166,200 tons of ore during the remaining eight months of 2018. Prepare the December 31, 2018, entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine's depletion. (Round your unit depreciation and depletion rates to 2 decimal places.)

Question

Beckham Hale

Business

26 October, 17:42

On April 2, 2018, Montana Mining Co. pays $3,721,000 for an ore deposit containing 1,525,000 tons. The company installs machinery in the mine costing $213,500, with an estimated seven-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. Montana begins mining on May 1, 2018, and mines and sells 166,200 tons of ore during the remaining eight months of 2018. Prepare the December 31, 2018, entries to record both the ore deposit depletion and the mining machinery depreciation. Mining machinery depreciation should be in proportion to the mine's depletion. (Round your unit depreciation and depletion rates to 2 decimal places.)

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Aimee Holder · Answer 1

Dep expense 428,796

Acc Depp Machine 23,268

Acc dep deposit 405,528

Explanation:

213,5000 machine used in the ore deposit, so it will depreciate at the same rate.

3,721,000 ore deposit

166,200/1,525,000 = 0.108983606

213,500 x 0.108983606 = 23,268

3,721,000 x 0.108983606 = 405,528