Forda Lumber Company owns a 11,830-acre tract of timber purchased in 2007 at a c
ID: 2477477 • Letter: F
Question
Forda Lumber Company owns a 11,830-acre tract of timber purchased in 2007 at a cost of $2,197 per acre. At the time of purchase, the land was estimated to have a value of $507 per acre without the timber. Forda Lumber Company has not logged this tract since it was purchased. In 2014, Forda had the timber cruised. The cruise (appraiser) estimated that each acre contained 13,520 board feet of timber. In 2014, Forda built 10 miles of roads at a cost of $13,250 per mile. After the roads were completed, Forda logged and sold 5,915 trees containing 1,436,500 board feet. Determine the cost of timber sold related to depletion for 2014. (Round answer to 0 decimal places, e.g. 1525.) Cost of timber sold $ If Forda depreciates the logging roads on the basis of timber cut, determine the depreciation expense for 2014. (Round answer to 0 decimal places, e.g. 1525.) Depreciation expense $ If Forda plants five seedlings at a cost of $7 per seedling for each tree cut, how should Forda treat the reforestation? Forda should the cost of $ and adjust the depletion the next time the timber is harvested.
Explanation / Answer
Ans a Cost per acre per timber $2197-507 1690 Cost of timber sold related to depletion 1690*11830 acres 19992700 Total Board Feet acres Denominator= 13520*11830 159941600 Total Board feet 1436500 Depletion 19992700/159941600*1436500 179563 Ans a Ans b Depreciated logging road on the basis of timber cut Logging road=$13250*10 132500 Depreciation on logging road 132500/159941600*1436500 1190 Ans Ans c Ford should capitalize the cost of $ 5915*5*$7 207025 Ans