Discussion:Accrued Depletion
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Discussion Forum Index --> Accounting Questions --> Accrued Depletion
DARYLGEYER (talk|edits) said: | 19 June 2007 |
| Client has land with basis of $50,000. Client is now extracting minerals and taking 15% depletion. The depletion deduction is being expensed, when I accrue accumulated depletion, he is going to soon exceed his basis in land. How do I show this on financials? | |
| 19 June 2007 | |
| http://www.principlesofaccounting.com/chapter%2011.htm#NATURAL%20RESOURCES
Try that link and see if that helps you. I googled "accounting for depletion" and came up with several promising hits. Good luck. | |
DARYLGEYER (talk|edits) said: | 19 June 2007 |
| I did same and did not find answer to question. | |
| 20 June 2007 | |
| I've been looking at this and all I can come up with is that perhaps the basis wasn't recorded correctly.
Here's a bump. Maybe someone will answer. | |
| June 25, 2007 | |
| Why do you say you'll exceed the basis in the land? Obviously, you cannot have a negative basis, so something is wrong somewhere. Maybe the depletion rate needs to be adjusted. | |
| 26 June 2007 | |
| Either that or the land basis was understated. It pretty much has to be one or the other. | |
| 26 June 2007 | |
| 15% depletion is a tax concept. % depletion can exceed basis. Depletion by unit is GAAP. It looks like you have been applying a tax deduction instead of a GAAP deduction on GAAP books. | |
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