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Tree Lovers Inc. purchased 100 acres of woodland in which the company intends to harvest...

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Question

Accounting

Tree Lovers Inc. purchased 100 acres of woodland in which the company intends to harvest the complete forest, leaving the land barren and worthless. Tree Lovers paid $2,100,000 for the land. Tree Lovers will sell the lumber as it is harvested and expects to deplete it over five years (twenty acres in year one, thirty acres in year two, twenty-five acres in year three, fifteen acres in year four, and ten acres in year five). Calculate the depletion expense for the next five years and create the journal entry for year one.

Solution

Year 1 ____ 20 =
Year 2 ____ 30 =
Year 3 ____ 25 =
Year 4 ____ 15 =
Year 5 ____ 10 =

Depletion Expense
Accumulated depletion

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