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Year Amount
1983 1$13,743,557
1983 13,456,699
1984 19,071,400
1985 17,756,308
1986 10,452,801
1 During 1983, Cordero’s coal mining operations were
transferred from one member of petitioner’s affiliated
group to another. This amount is the aggregate overburden
removal cost incurred by one member of petitioner’s
affiliated group of corporations during 1983.
For financial accounting purposes, beginning in 1976
and continuing through the last year in issue, petitioner
treated the costs incurred for overburden removal at the
Gillette mine as associated with the coal extracted during
the year, and petitioner included those costs in its cost
of goods sold. Before December 1983, Cordero added all of
its overburden removal costs to its costs of goods sold as
the overburden removal costs were incurred.
In December 1983, Cordero changed its financial
accounting treatment of overburden removal costs in order
to defer the portion of those costs that is attributable
to exposed but unmined coal. Beginning in that month,
the costs of removing overburden, determined using the
volumetric ratio method described above, were booked
as additions to a general ledger account entitled:
“Preproduction Overburden Removal-–Year to Date Change.”
As coal was produced, the overburden removal costs
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