Acc422 Intermediate Accounting: P11-6 Conan O'Brien Logging and Lumber Company

Note: There are other versions of this same problem/exercise so please make sure you have compared your homework to the question I posted in the website as well as with this tutorial to make sure they are the same.

Acc422 Intermediate Accounting

P11-6 (Depletion, Timber, and Extraordinary Loss)
Conan O'Brien Logging and Lumber Company owns 3,100 acres of timberland on the north side of Mount Leno, which was purchased in 1998 at a cost of $600 per acre. In 2010, O'Brien began selectively logging this timber tract. In May of 2010,Mount Leno erupted, burying the timberland of O'Brien under a foot of ash. All of the timber on the O'Brien tract was downed. In addition, the logging roads, built at a cost of $155,000, were destroyed, as well as the logging equipment, with a net book value of $303,500.
At the time of the eruption, O'Brien had logged 20% of the estimated 500,000 board feet of timber. Prior to the eruption, O'Brien estimated the land to have a value of $210 per acre after the timber was harvested. O'Brien includes the logging roads in the depletion base.
O'Brien estimates it will take 3 years to salvage the downed timber at a cost of $728,900. The timber can be sold for pulp wood at an estimated price of $5 per board foot. The value of the land is unknown, but must be considered nominal due to future uncertainties.

Instructions:
a. Determine the depletion cost per board foot for the timber harvested prior to the eruption of Mount Leno. (Round answer to 2 decimal places.)
b. Prepare the journal entry to record the depletion prior to the eruption.
c. If this tract represents approximately half of the timber holdings of O'Brien, determine the amount of the extraordinary loss due to the eruption of Mount Leno for the year ended December 31, 2010. (Do not round intermediate computations and round your answer to 0 decimal places, i.e. 25,250.)
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