ACCT 3110 Fall 2017/ Chapter 11 Homework Exercise 11-19 Stanislaw Timber Company

Question

ACCT 3110 Fall 2017/ Chapter 11 Homework Exercise 11-19 Stanislaw Timber Company owns 9,000 acres of timberland purchased in 2006 at a cost of $1,400 per acre. At the time of purchase, the land without the timber was valued at $400 per acre. In 2007, Stanislaw built fire lanes and roads, with a life of 30 years, at a cost of $84,000. Every year, Stanislaw sprays to prevent disease at a cost of $3,000 per year and spends $7,000 to maintain the fire lanes and roads. During 2008, Stanislaw selectively logged and sold 700,000 board feet of timber, of the estimated 3.500,000 board feet. In 2009, Stanislaw planted new seedlings to replace the trees cut at a cost of $100,000. Determine the depreciation expense and the cost of timber sold related to depletion for 2008. (Round intermediate calculations to 5 decimal places, e.g. 1.54687 and final answers to O decimal places, e.g.5,125) Depreciation expense s Cost of timber sold Stanislaw has not logged since 2008. If Stanislaw logged and sold 900,000 board feet of timber in 2019, when the timber cruise (appraiser) estimated 5,000,000 board feet, determine the cost of timber sold related to depletion for 2019. (Round intermediate calculations to 5 decimal places, e.g 1.54687 and final answers to O decimal places, e.g. 5,125.) Cost of timber sold s Question Attempts: Unlimited apyright 2000201 7 by Jonn wey & Sons ine or related conganes Ad

Explanation / Answer

1.

Depreciation expense = $84000 / 30 years

= $2800

Cost of timber sold = $1400 - $400

= $1000

Value of timber = $1000 * 9000 acres

= $9000000

Brand feet = $9000000 / 3500000 brand feet

= $2.57

Cost of timber sold = 700000 * $2.57

= $1800000.

2.

Cost of timber sold :

=( $9000000 - $1800000) + $100000

= $7300000.

= 900000 * ($7300000 / 500000)

= $1314000.

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