Question

Alcide mining company purchased land on february 1, 2017, at a cost of $1,190,000. it estimated that a total of 60,000 tons of mineral was available for mining. after it has removed all the natural resources, the company will be required to restore the property to its previous state because of strict environmental protection laws. it estimates the fair value of this restoration obligation at $90,000. it believes it will be able to sell the property afterwards for $100,000. it incurred developmental costs of $200,000 before it was able to do any mining. in 2017, resources removed totaled 30,000 tons. the company sold 22,000 tons.

Answer 1

Answer:

COGS:                 22,000 x $23  = 506,000

Ending Inventory: 8,000 x $23  =  184,000

Explanation:

acquisition cost:           1,190,000

development cost:         200,000

restoration cost:              90,000

salvage value:              (100,000)  

depreciable amount    1,380,000

1,380,000 / 60,000 tons = 23 dollars per ton:

COGS:                 22,000 x $23  = 506,000

Ending Inventory: 8,000 x $23  =  184,000