Question

A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. The depletion expense per ton of ore is:

Answer 1

Depletion expense per ton = $0.625

Step-by-step explanation:

Given:

Total cost = $1,500,000

Total ore = 2,000,000 tons

Salvage value = $250,000

Find:

Depletion expense per ton

Computation:

Depletion expense per ton = [Total cost - Salvage value] / Total ore

Depletion expense per ton = [$1,500,000 - $250,000] / 2,000,000

Depletion expense per ton = $0.625