Question

The journal entry to record depletion would include a _____ to _____.

A) debit; Depletion Expense
B) credit; Depletion Expense
C) debit; Accumulated Depreciation
D) credit; Natural Resource Expense

Answer 1

To record depletion, one must debit Depletion Expense and credit the associated natural resource asset account, reflecting the consumed value as an expense.

Step-by-step explanation:

The journal entry to record depletion involves adjusting the accounting records for the using up of natural resources. Depletion is similar to depreciation, but instead it applies to natural resources such as oil, minerals, timber, etc. When a company extracts these natural resources, the cost associated with the depletion of the resource must be recorded as an expense. The correct journal entry would include a debit to Depletion Expense and a credit to the asset account, typically titled something like 'Oil and Gas Properties' or 'Timber Reserves'. This reflects the reduction of the natural resource asset's value and the allocation of that cost as an expense over the period the resource is consumed.