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Financial Accounting

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Determining Cost: Natural Resources

FINACT-7T3OQI

Pine Grove Lumber Company purchased a 1,000 acre tract of land for \$16,000,000. They also paid a geologist an additional \$100,000 to estimate the amount of timber that is available on the tract of land.

In order to be able to remove trees from the land, Pine Grove built roads costing \$1,000,000. Several trucks and items of equipment were purchased totaling \$250,000 in order to haul the trees to the processing plant.

What is the amount that will be capitalized on the company’s Balance Sheet as Natural Resources?