Question

Bramble Company owns 9,000 acres of timberland purchased in 2006 at a cost of $1,540 per acre. At the time of purchase, the land without the timber was valued at $440 per acre. In 2007, Bramble built fire lanes and roads, with a life of 30 years, at a cost of $92,400. Every year, Bramble sprays to prevent disease at a cost of $3,300 per year and spends $7,700 to maintain the fire lanes and roads. During 2008, Bramble selectively logged and sold 770,000 board feet of timber, of the estimated 3,850,000 board feet. In 2009, Bramble planted new seedlings to replace the trees cut at a cost of $110,000.

1. Bramble has not logged since 2008. If Bramble logged and sold 990,000 board feet of timber in 2019, when the timber cruise (appraiser) estimated 5,500,000 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 0 decimal places, e.g. 5,125.)

Answer 1

calculation of cost of tmber sold related to depeletion
Depreciation expenses = 92400/30 = 3080
cost of timberland per acre				1540
less: cost of land				-440
cost of timber				1100
value of timberland 1100*9000				9900000
estimated board feet				3850000
total cost per board (9900000/3850000)				2.57
board feet timber sold				770000
Cost of timber sold (770000*2.57)				1980000
timber value				9900000
less: sale				1980000
balance				7920000
add: new seedling				110000
total				8030000
estimated broad feet				5500000
cost per feet (8030000/5500000)				1.46
timber sold				990000
cost of timber sold (1.46*990000) 2019				1445400