Question

A company purchased 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 residual value of the land is estimated to be $250,000. What is the amount of depletion per ton of ore

Answer 1

$0.625

Step-by-step explanation:

Depletion expense per ton of ore = (Cost of the asset - Salvage value) / Number of units

Depletion expense per ton of ore = ($1500000 - $250000) / 2000000

Depletion expense per ton of ore = $1250000 / 2000000 units

Depletion expense per ton of ore = $0.625

So, the amount of depletion expenses per ton of ore is $0.625.