Question

On July 23 of the current year, Dakota Mining Co. pays $7,568,400 for land estimated to contain 8,904,000 tons of recoverable ore. It installs and pays for machinery costing $1,246,560 on July 25. The company removes and sells 456,750 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined. (e) If the machine will be used at another site when extraction is complete, how would we depreciate this machine

Answer 1

Answer: Using its own useful life.

Step-by-step explanation:

If the machine will not be abandoned after the mine is depleted and will instead be used in another site, this means that the machine is still useful.

It would therefore be better to use the useful life of that machine instead of tying it to that of the mine. This would ensure that it is depreciated over a time period that accurately takes into account, its usefulness.