Question

on march 31, 2024, a company purchased the right to remove gravel from an old rock quarry. the gravel is to be sold as roadbed for highway construction. the cost of the quarry rights was $315,000, with estimated salable rock of 35,000 tons. during 2024, the company loaded and sold 4,400 tons of rock and estimated that 30,600 tons remained on december 31, 2024. on january 1, 2025, the company estimated that 8,800 tons still remained. during 2025, the company loaded and sold 13,200 tons. the company uses the units-of-production method.the company would record depletion in 2024 in the amount of:

Answer 1

Using the units-of-production method, the company would record depletion in 2024 in the amount of $39,600, derived from $9 per ton cost and 4,400 tons sold.

Step-by-step explanation:

To calculate the depletion for the company in 2024 using the units-of-production method, we first need to determine the cost per ton of the gravel. This is done by dividing the total cost of the quarry rights by the estimated salable rock. So, $315,000 ÷ 35,000 tons = $9 per ton. In 2024, the company sold 4,400 tons, so the depletion expense is 4,400 tons × $9 per ton = $39,600.