Question

A company purchased a mineral deposit for $800,000. it expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000. in the current year, the company mined and sold 90,000 tons of ore. its depletion expense for the current period is equal to:

Answer 1

The answer is 56250

90,000×((800,000−50,000)÷1,200,000)
=56,250

Answer 2

Depletion Expense for Current Year = 57,692

Step-by-step explanation:

Cost Price of Mineral Deposit= $800,000

Salvage Value = $50,000

Useful life = Unknown

Expected to Produce = 1200,000 tons of ore

Currently mined and sold = 90,000 tons of ore

Depletion Expense for current year = ?

Expected to produce 1200,000 tons in ______ number of years

Currently produced 90,000 tons

therefore = 1200,000

90,000

= 13 years to produce 1200,000 tons of ore

Therefore Depletion Expense for Current Year = 800,000-50,000

13 years

= 750,000

13

= 57,692