Question

On March 25, 2019, Parscale Company purchases the rights to a mineral interest for $8,000,000. At that time, the remaining recoverable units in the mineral interest are estimated to be 500,000 tons. If required, round any division to two decimal places and use in subsequent computations. Round your final answer to the nearest dollar. If 80,000 tons are mined and 75,000 tons are sold this year, calculate Parscale’s cost depletion for 2019. $

Answer 1

$1,280,000

Step-by-step explanation:

Depletion cost = Cost x (total amount mined this year/ total recoverable units)

$8,000,000 x (80,000 / 500,000) = $1,280,000

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