191.Depletion is
a.a decrease in fair value of natural resources.
b.the amount of spoilage that occurs when natural resources are extracted.
c.the allocation of the cost of natural resources to expense.
d.the method used to record unsuccessful patents.
192.The method most commonly used to compute depletion is the
a.straight-line method.
b.double-declining-balance method.
c.units-of-activity method.
d.effective interest method.
193.In computing depletion, residual value is
a.always immaterial.
b.ignored.
c.impossible to estimate.
d.included in the calculation.
194.If a mining company extracts 2,000,000 tons in a period but only sells 1,500,000 tons,
a.total depletion on the mine is based on the 1,500,000 tons.
b.depletion expense is recognized on the 2,000,000 tons extracted.
c.depletion expense is recognized on the 1,500,000 tons extracted and sold.
d.a separate accumulated depletion account is set up to record depletion on the 500,000 tons extracted but not sold.
195.A coal company invests €12 million in a mine estimated to have 20 million tons of coal and no residual value. It is expected that the mine will be in operation for 5 years. In the first year, 1,000,000 tons of coal are extracted and sold. What is the depletion expense for the first year?
a.€600,000
b.€240,000
c.€60,000
d.Cannot be determined from the information provided.
196.Accumulated Depletion
a.is used by all companies with natural resources.
b.has a normal debit balance.
c.is a contra-asset account.
d.is never shown on the statement of financial position.
197.On July 4, 2014, Wyoming Mining Company purchased the mineral rights to a granite deposit for $1,600,000. It is estimated that the recoverable granite will be 400,000 tons. During 2014, 100,000 tons of granite was extracted and 60,000 tons were sold. The amount of the Depletion Expense recognized for 2014 would be
a.$200,000.
b.$120,000.
c.$240,000.
d.$400,000.
198.Depletion expense is computed by multiplying the depletion cost per unit by the
a.total estimated units.
b.total actual units.
c.number of units extracted.
d.number of units sold.
199.On January 1, 2014, Cooper Tree Company (CTC) purchases a copper mine for €15,000,000. The mine is estimated to have 20 million tons of copper and no residual value. CTC estimates that it will take 10 years to extract all the copper contained in the mine. CTC spends an additional €3,000,000 during the early part of 2014 preparing the mine. During 2014, CTC extracts and sells 3 million tons of copper. On CTC’s December 31, 2014 statement of financial position, at what net amount is the copper mine reported?
a.€15,300,000
b.€16,200,000
c.€13,500,000
d.€12,750,000
200.On January 1, 2014, Cooper Tree Company (CTC) purchases a copper mine for €15,000,000. The mine is estimated to have 20 million tons of copper and no residual value. CTC estimates that it will take 10 years to extract all the copper contained in the mine. CTC spends an additional €3,000,000 during the early part of 2014 preparing the mine. During 2014, CTC extracts 3 million tons of copper; however due to price fluctuations none of the copper is sold during 2014. On CTC’s financial statement for 2014, how would the depletion associated with the extracted copper be reported?
a.As an expense on the income statement.
b.As inventory on the statement of financial position.
c.As a loss on the income statement.
d.As part of comprehensive income(unrealized gain).