Question

Felix Mining acquired a copper mine at a total cost of $3,000,000. The mine is expected to produce 6,000,000 tons of copper over its five-year useful life and have no residual value. During the first year of operations, 750,000 tons of copper was extracted. Depletion for the first year should be:

Answer 1

Answer:

$375,000

Explanation:

The computation of the depletion expense for the first year is shown below:

= Total cost of a copper mine ÷ expected number of tons produced × extracted tons in the first year

= $3,000,000 ÷ 6,000,000 tons × 750,000 tons

= $375,000

We simply applied the above formula so that the depletion expense could come for the first year