Sunoco, Inc. and Subsidiaries - Page 6

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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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