SA Forest Resources purchased forest acreage for$500,000
Chapter 16, Problem 16.39(choose chapter or problem)
SA Forest Resources purchased forest acreage for$500,000 from which an estimated 200 million boardfeet of lumber are recoverable. The company will sellthe lumber for $0.10 per board foot. No lumber willbe sold next year because an environmental impactstatement must be completed before harvesting can begin. In years 2 through 10, however, the companyexpects to remove 20 million board feet per year. Theinflation rate is 8%, and the companys MARR is10%. Determine the depletion amount in years 1 and2 by the cost depletion method.
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