{"id":271,"date":"2024-09-06T16:48:09","date_gmt":"2024-09-06T16:48:09","guid":{"rendered":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/reporting-natural-resources\/"},"modified":"2024-09-13T14:48:52","modified_gmt":"2024-09-13T14:48:52","slug":"reporting-natural-resources","status":"publish","type":"chapter","link":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/chapter\/reporting-natural-resources\/","title":{"raw":"Reporting Natural Resources","rendered":"Reporting Natural Resources"},"content":{"raw":"<section class=\"textbox learningGoals\" aria-label=\"Learning Goals\">\r\n<ul>\r\n \t<li>Demonstrate proper financial statement presentation and disclosures related to natural resources<\/li>\r\n<\/ul>\r\n<\/section>&nbsp;\r\n\r\nSome companies may list investments in natural resources as a separate line item on the balance sheet itself. One thing we noticed with Albemarle Corporation is that mineral rights and reserves were listed with property, plant, and equipment.\r\n<table class=\"fin-table acctstatement\">\r\n<thead>\r\n<tr>\r\n<th colspan=\"4\">NOTE 9 - Property, Plant and Equipment:<\/th>\r\n<\/tr>\r\n<tr>\r\n<th colspan=\"4\"><strong>\u00a0\u00a0\u00a0\u00a0\u00a0Property, plant and equipment, at cost, consist of the following at December 31, 2019 and 2018 (in thousands):<\/strong><\/th>\r\n<\/tr>\r\n<tr>\r\n<th><\/th>\r\n<th>Useful Lives (Years)<\/th>\r\n<th colspan=\"2\">December 31,<\/th>\r\n<\/tr>\r\n<tr>\r\n<th><span class=\"u-sr-only\">Description <\/span><\/th>\r\n<th><\/th>\r\n<th scope=\"col\">2019<\/th>\r\n<th scope=\"col\">2018<\/th>\r\n<\/tr>\r\n<\/thead>\r\n<tbody>\r\n<tr>\r\n<td>Land<\/td>\r\n<td class=\"c\">---<\/td>\r\n<td class=\"r\">$\u00a0\u00a0\u00a0\u00a0\u00a0116,728<\/td>\r\n<td class=\"r\">$\u00a0\u00a0\u00a0\u00a0\u00a0123,518<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Land imporvements<\/td>\r\n<td class=\"c\">10-30<\/td>\r\n<td class=\"r\">83,256<\/td>\r\n<td class=\"r\">63,349<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Building and improvements<\/td>\r\n<td class=\"c\">10-50<\/td>\r\n<td class=\"r\">337,728<\/td>\r\n<td class=\"r\">251,980<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Machinery and equipment<sup>(a)<\/sup><\/td>\r\n<td class=\"c\">2-45<\/td>\r\n<td class=\"r\">3,355,518<\/td>\r\n<td class=\"r\">2,780,478<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Mineral rights and reserves<\/td>\r\n<td class=\"c\">7-60<\/td>\r\n<td class=\"r\">1,764,067<\/td>\r\n<td class=\"r\">696,033<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Construction in progress<\/td>\r\n<td class=\"c\">---<\/td>\r\n<td class=\"r\">1,160,545<\/td>\r\n<td class=\"r\">883,705<\/td>\r\n<\/tr>\r\n<tr>\r\n<td>Total<\/td>\r\n<td><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span>\r\n$\u00a0\u00a0\u00a0\u00a0\u00a06,817,843\r\n<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span>\r\n$\u00a0\u00a0\u00a0\u00a0\u00a04,799,063\r\n<span class=\"u-sr-only\">Double line<\/span><\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"4\">(a) Consists primarily of (1) short-lived production equipment components, office and building equipment and other equipment with estimated lives ranging 2-7 years, (2) production process equipment (intermediate components) with estimated lives ranging 8-19 years, (3) production process equipment (major unit components) with estimated lives ranging from 20-29 years, and (4) production process equipment (infrastructure and other) with estimated lives ranging 30-45 years.<\/td>\r\n<\/tr>\r\n<tr>\r\n<td colspan=\"4\">The cost of property, plant and equipment is depreciated generally by the straight-line method. Depletion of mineral rights is based on the units-of-production method. Depreciation expense, including depletion, amounted to $183.3 million, $170.0 million and $169.5 million during the years ended December 39, 2019, 2018 and 2017, respectively. Interest capitalized on significant capital projects in 2019. 2018, and 2017 was $30.2 million, $19.3 million and $7.4 million, respectively.<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n&nbsp;\r\n\r\n<a href=\"http:\/\/investors.albemarle.com\/static-files\/37d4e140-ebe0-4e7b-8d9f-7b995197ae08\">2019 Annual Report<\/a>\r\n\r\nIn addition to the amount reported on the balance sheet as part of PP&amp;E, itemized in Note 9, Albemarle included a note describing the accounting policy for significant resource development expenses:\r\n<blockquote>\r\n<h2>Resource Development Expenses<\/h2>\r\nWe incur costs in resource exploration, evaluation and development during the different phases of our resource development projects. Exploration costs incurred before obtaining legal rights to explore an area are generally expensed as incurred. After obtaining legal rights, exploration costs are expensed in areas where we have uncertainty about obtaining proven resources. In areas where we have substantial knowledge about the area and consider it probable to obtain commercially viable proven resources, exploration and evaluation costs are capitalized.\r\n\r\nIf technical feasibility studies have been obtained, resource evaluation expenses are capitalized when the study demonstrates proven or probable resources for which future economic returns are expected, while costs for projects that are not considered viable are expensed. Development costs that are necessary to bring the property to commercial production or increase the capacity or useful life are capitalized. Costs to maintain the production capacity in a property under production are expensed as incurred.\r\n\r\nCapitalized resource costs are depleted using the units-of-production method. Our resource development assets are evaluated for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.<\/blockquote>\r\nBy now, you probably recognize most of these terms and concepts.\r\n\r\n<section class=\"textbox tryIt\" aria-label=\"Try It\">[ohm2_question hide_question_numbers=1]25303[\/ohm2_question]<\/section>","rendered":"<section class=\"textbox learningGoals\" aria-label=\"Learning Goals\">\n<ul>\n<li>Demonstrate proper financial statement presentation and disclosures related to natural resources<\/li>\n<\/ul>\n<\/section>\n<p>&nbsp;<\/p>\n<p>Some companies may list investments in natural resources as a separate line item on the balance sheet itself. One thing we noticed with Albemarle Corporation is that mineral rights and reserves were listed with property, plant, and equipment.<\/p>\n<table class=\"fin-table acctstatement\">\n<thead>\n<tr>\n<th colspan=\"4\">NOTE 9 &#8211; Property, Plant and Equipment:<\/th>\n<\/tr>\n<tr>\n<th colspan=\"4\"><strong>\u00a0\u00a0\u00a0\u00a0\u00a0Property, plant and equipment, at cost, consist of the following at December 31, 2019 and 2018 (in thousands):<\/strong><\/th>\n<\/tr>\n<tr>\n<th><\/th>\n<th>Useful Lives (Years)<\/th>\n<th colspan=\"2\">December 31,<\/th>\n<\/tr>\n<tr>\n<th><span class=\"u-sr-only\">Description <\/span><\/th>\n<th><\/th>\n<th scope=\"col\">2019<\/th>\n<th scope=\"col\">2018<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Land<\/td>\n<td class=\"c\">&#8212;<\/td>\n<td class=\"r\">$\u00a0\u00a0\u00a0\u00a0\u00a0116,728<\/td>\n<td class=\"r\">$\u00a0\u00a0\u00a0\u00a0\u00a0123,518<\/td>\n<\/tr>\n<tr>\n<td>Land imporvements<\/td>\n<td class=\"c\">10-30<\/td>\n<td class=\"r\">83,256<\/td>\n<td class=\"r\">63,349<\/td>\n<\/tr>\n<tr>\n<td>Building and improvements<\/td>\n<td class=\"c\">10-50<\/td>\n<td class=\"r\">337,728<\/td>\n<td class=\"r\">251,980<\/td>\n<\/tr>\n<tr>\n<td>Machinery and equipment<sup>(a)<\/sup><\/td>\n<td class=\"c\">2-45<\/td>\n<td class=\"r\">3,355,518<\/td>\n<td class=\"r\">2,780,478<\/td>\n<\/tr>\n<tr>\n<td>Mineral rights and reserves<\/td>\n<td class=\"c\">7-60<\/td>\n<td class=\"r\">1,764,067<\/td>\n<td class=\"r\">696,033<\/td>\n<\/tr>\n<tr>\n<td>Construction in progress<\/td>\n<td class=\"c\">&#8212;<\/td>\n<td class=\"r\">1,160,545<\/td>\n<td class=\"r\">883,705<\/td>\n<\/tr>\n<tr>\n<td>Total<\/td>\n<td><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span><br \/>\n$\u00a0\u00a0\u00a0\u00a0\u00a06,817,843<br \/>\n<span class=\"u-sr-only\">Double line<\/span><\/td>\n<td class=\"r line-single line-double\"><span class=\"u-sr-only\">Single line<\/span><br \/>\n$\u00a0\u00a0\u00a0\u00a0\u00a04,799,063<br \/>\n<span class=\"u-sr-only\">Double line<\/span><\/td>\n<\/tr>\n<tr>\n<td colspan=\"4\">(a) Consists primarily of (1) short-lived production equipment components, office and building equipment and other equipment with estimated lives ranging 2-7 years, (2) production process equipment (intermediate components) with estimated lives ranging 8-19 years, (3) production process equipment (major unit components) with estimated lives ranging from 20-29 years, and (4) production process equipment (infrastructure and other) with estimated lives ranging 30-45 years.<\/td>\n<\/tr>\n<tr>\n<td colspan=\"4\">The cost of property, plant and equipment is depreciated generally by the straight-line method. Depletion of mineral rights is based on the units-of-production method. Depreciation expense, including depletion, amounted to $183.3 million, $170.0 million and $169.5 million during the years ended December 39, 2019, 2018 and 2017, respectively. Interest capitalized on significant capital projects in 2019. 2018, and 2017 was $30.2 million, $19.3 million and $7.4 million, respectively.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p><a href=\"http:\/\/investors.albemarle.com\/static-files\/37d4e140-ebe0-4e7b-8d9f-7b995197ae08\">2019 Annual Report<\/a><\/p>\n<p>In addition to the amount reported on the balance sheet as part of PP&amp;E, itemized in Note 9, Albemarle included a note describing the accounting policy for significant resource development expenses:<\/p>\n<blockquote>\n<h2>Resource Development Expenses<\/h2>\n<p>We incur costs in resource exploration, evaluation and development during the different phases of our resource development projects. Exploration costs incurred before obtaining legal rights to explore an area are generally expensed as incurred. After obtaining legal rights, exploration costs are expensed in areas where we have uncertainty about obtaining proven resources. In areas where we have substantial knowledge about the area and consider it probable to obtain commercially viable proven resources, exploration and evaluation costs are capitalized.<\/p>\n<p>If technical feasibility studies have been obtained, resource evaluation expenses are capitalized when the study demonstrates proven or probable resources for which future economic returns are expected, while costs for projects that are not considered viable are expensed. Development costs that are necessary to bring the property to commercial production or increase the capacity or useful life are capitalized. Costs to maintain the production capacity in a property under production are expensed as incurred.<\/p>\n<p>Capitalized resource costs are depleted using the units-of-production method. Our resource development assets are evaluated for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable.<\/p><\/blockquote>\n<p>By now, you probably recognize most of these terms and concepts.<\/p>\n<section class=\"textbox tryIt\" aria-label=\"Try It\"><iframe loading=\"lazy\" id=\"ohm25303\" class=\"resizable\" src=\"https:\/\/ohm.one.lumenlearning.com\/multiembedq.php?id=25303&theme=lumen&iframe_resize_id=ohm25303&source=tnh\" width=\"100%\" height=\"150\"><\/iframe><\/section>\n","protected":false},"author":6,"menu_order":17,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Reporting Natural Resources\",\"author\":\"Joseph Cooke\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"}]","pb_show_title":"on","pb_short_title":"","pb_subtitle":"","pb_authors":[],"pb_section_license":""},"chapter-type":[],"contributor":[],"license":[],"part":254,"module-header":"- Select Header -","content_attributions":[{"type":"original","description":"Reporting Natural Resources","author":"Joseph Cooke","organization":"Lumen Learning","url":"","project":"","license":"cc-by","license_terms":""}],"internal_book_links":[],"video_content":null,"cc_video_embed_content":{"cc_scripts":"","media_targets":[]},"try_it_collection":null,"_links":{"self":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/271"}],"collection":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters"}],"about":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/types\/chapter"}],"author":[{"embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/users\/6"}],"version-history":[{"count":3,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/271\/revisions"}],"predecessor-version":[{"id":1065,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/271\/revisions\/1065"}],"part":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/parts\/254"}],"metadata":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapters\/271\/metadata\/"}],"wp:attachment":[{"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/media?parent=271"}],"wp:term":[{"taxonomy":"chapter-type","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/pressbooks\/v2\/chapter-type?post=271"},{"taxonomy":"contributor","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/contributor?post=271"},{"taxonomy":"license","embeddable":true,"href":"https:\/\/content.one.lumenlearning.com\/financialaccounting\/wp-json\/wp\/v2\/license?post=271"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}