Integrated Case IC16-2 (Saltwork Inc)on page 1092 of Intermediate Accounting ( 9th Canadian Edition)...

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Integrated Case IC16-2 (Saltwork Inc)on page 1092 of Intermediate Accounting ( 9th Canadian Edition) Vol 2. You are required to analyze some accounting issues, Please type two or three pages (in double space)

Robert · Accepted Answer

Saltsworks Inc 
Saltwork Inc is engaged in production of salt. The Company has two pieces of properties, 
which has two salt mines. The company is extracting salt from these mines with the help of a 
particular procedure. There are expenses which are incurred by SI in the process of digging and 
soil testing for the mine. Hence some of the expenses will be revenue in nature and some of the 
expenses will be capital in nature. The cost incurred for digging the tunnel may be treated as a 
capital expenditure because will help in extraction of salt and with the help of which the revenue 
increases. Again the cost incurred $300,000 to locate mine 3 need to be treated as capital 
expenditure. The income which will generated by giving the rights to cut the pine trees to 
Logging Co need to be spread over for three years as the benefits are supposed to be spread  over 
for next three years. SI has already spent $1 Million towards the construction of road and 
because of the flood;

Integrated Case IC16-2 (Saltwork Inc)on page 1092 of Intermediate Accounting ( 9th Canadian Edition) Vol 2. You are required to analyze some accounting issues, Please type two or three pages (in...

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