On January 1, 2011, Cooper Tree Company (CTC) purchases a copper mine for €10,000,000.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 €2,000,000 during the early part of 2011 preparing the mine.During 2011, CTC extracts and sells 3 million tons of copper.On CTC's December 31, 2011 statement of financial position, at what net amount is the copper mine reported?

Question

Quizplus · Accepted Answer

The net amount of the copper mine reported on CTC's December 31, 2011 statement of financial position is €10,200,000. This is calculated as the initial cost of the mine (€10,000,000) plus the additional preparation costs (€2,000,000) less the accumulated depletion for the year (€2,200,000). The accumulated depletion is calculated as the cost of the mine divided by the estimated total tons of copper (10,000,000 / 20,000,000) multiplied by the number of tons of copper extracted during the year (3,000,000).

On January 1, 2011, Cooper Tree Company (CTC) Purchases a Copper