Question

Sheridan Logging and Lumber Company owns 3,020 acres of timberland on the north side of Mount Leno, which was purchased in 2008 at a cost of $500 per acre. In 2020, Sheridan began selectively logging this timber tract. In May 2020, Mount Leno erupted, burying the timberland of Sheridan under a foot of ash. All of the timber on the Sheridan tract was downed. In addition, the logging roads, built at a cost of $144,100, were destroyed, as well as the logging equipment, with a net book value of $277,600. At the time of the eruption, Sheridan had logged 20% of the estimated 509,950 board feet of timber. Prior to the eruption, Sheridan estimated the land to have a value of $210 per acre after the timber was harvested. Sheridan includes the logging roads in the depletion base Sheridan estimates it will take 3 years to salvage the downed timber at a cost of $676,400. The timber can be sold for pulp wood at an estimated price of $3 per board foot. The value of the land is unknown, but must be considered nominal due to future uncertainties Determine the depletion cost per board foot for the timber harvested prior to the eruption of Mount Leno. (Round per unit answer to 2 decimal places, e.g. 0.45.) Depletion cost per board foot Prepare the journal entry to record the depletion prior to the eruption. (If no entry is required, select "No entry" for the account titles and enter o for the amounts. Round per unit answer to 2 decimal places, e.g. 0.45 for computational purpose and final answers to 0 decimal places, e.g. 45,892. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit If this tract represents approximately half of the timber holdingss of Sheridan, determine the amount of the unusual loss due to the eruption of Mount Leno for the year ended December 31, 2020. Unusual loss due to the eruption of Mount Leno

Answer 1

Solution Depletton Cest pun board foet 6gnal Cest = 3020 X 500 151o00o Less Restdu al Valve Land L 3020x 210 634200 875 800 Cest oggang >rood 144100 fo19900 Depletion prtoot boand ol90050950 oUnal en R03980 Intertery 50950 20 x2) 203980 Timber onusual Los Los imber [ 875600 xo.8] oo640 66400 Salvaging timber Cest es amoont Pecoveud 1२२5$8० 1531 60 509950 x0-8 x 634200 Land Vess In valwe tes Loggngoad 44100 Yo. 152-80 Lo ment~ bork value Extaordnay los oss 18024D