Question

At the beginning of 2021, Terra Lumber Company purchased a timber tract from Boise Cantor for $3,200,000. After the timber is cleared, the land will have a residual value of $600,000. Roads to enable logging operations were constructed and completed on March 30, 2021. The cost of the roads, which have no residual value and no alternative use after the tract is cleared, was $240,000. During 2021, Terra logged 500,000 of the estimated five million board feet of timber.Required: Calculate the 2018 depletion of the timber tract and depreciation of the logging roads assuming the units-of-production method is used for both assets.

Answer 1

The answer and procedures of the exercise are attached in the following archives.

Step-by-step explanation:

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