Question

In 2006, Jarrett Company purchased a tract of land as a possible future plant site. In January, 2014, valuable sulphur deposits were discovered on adjoining property and Jarrett Company immediately began explorations on its property. In December, 2014, after incurring $800,000 in exploration costs, which were accumulated in an expense account, Jarrett discovered sulphur deposits appraised at $4,500,000 more than the value of the land. To record the discovery of the deposits, Jarrett should ________.

Answer 1

debit $800,000 to an asset account

Step-by-step explanation:

To record the discovery of the deposits, Jarrett should debit $800,000 to an asset account because Jarrett Company purchased a tract of land as a possible future plant site which is an asset in which

In December, 2014, after incurring $800,000 in exploration costs, which were accumulated in an expense account, Jarrett discovered sulphur deposits appraised at $4,500,000 more than the value of the land which is why to record the discovery of the deposits, Jarrett should debit the $800,000 to an asset account.