P11-7 Depletion; change in estimateIn 2011 the Marion Company purchased land con

P11-7 Depletion; change in estimateIn 2011 the Marion
Company purchased land containing a mineral mine for $1600000.
Additional costs of $600000 were incurred to develop the mine.
Geologists estimated that 400000 tons of ore would be extracted. After
the ore is removed the land will have a resale value of $100000.To
aid in the extraction Marion built various structures and small
storage buildings on the site at a cost of $150000. These structures
have a useful life of 10 years. The structures cannot be moved after the
ore has been removed and will be left at the site. In addition new
equipment costing $80000 was purchased and installed at the site.
Marion does not plan to move the equipment to another site but
estimates that it can be sold at auction for $4000 after the mining
project is completed.In 2011 50000 tons of ore was extracted
and sold. In 2012 the estimate of total tons of ore in the mine was
revised from 400000 to 487500. During 2012 80000 tons were
extracted of which 60000 tons were sold.1. Compute depletion
and depreciation of the mine and the mining facilities and equipment for
2011 and 2012. Marion uses the units-of-production method to determine
depreciation on mining facilities and equipment.2. Compute the book value of the mineral mine structures and equipment as of December 31 2012.3. Discuss the accounting treatment of the depletion and depreciation on the mine and mining facilities and equipment.