Question

104. During 2017, Logan Corporation acquired a mineral mine for $4,000,000 of which $400,000 was ascribed to land value after the mineral has been removed. Geological surveys have indicated that 10 million units of the mineral could be extracted. During 2017, 1, 500,000 units were extracted and 1,000,000 units were sold. What is the amount of depletion expense for 2017

Answer 1

$540,000

Step-by-step explanation:

Depletion expense = (unit extracted in a year/ total units ) x (Cost- salvage value)

(1, 500,000 / 10,000,000) x (

$4,000,000 - $400,000) = 0.15 × $3,600,000 = $540,000

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