Question

During 2017, Bolton Corporation acquired a mineral mine for $1,500,000 of which $200,000 was determined to be the salvage value of the land after the mineral has been removed. Geological surveys have indicated that 12 million units of the mineral could be extracted. During 2017, 1,500,000 units were extracted and 1,200,000 units were sold. What is the amount of depletion affecting the 2017 income statement? -CHEGG

Answer 1

Answer:

$162,500

Explanation:

Depletion is used to expense the cost of extracting natural resources.

Depletion expense = (unit extracted in 2017 / total units that could be extracted) x (Cost- salvage value)

(1,500,000 / 12,000,000) x ( $1,500,000 - $200,000) = 0.125 × 1,300,000 = $162,500

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Answer 2

Answer:

$162,500.00

Explanation:

Depletion  expense in year 2017= cost of the mineral mine-salvage value of land*units of mineral extracted in 2017/estimated mineral extraction units

cost of the mineral mine is $1,500,000

salvage value of the land is $200,000

units of mineral extracted in 2017 is 1,500,00o units

estimated mineral extraction units is 12,000,000

depletion expense=($1,500,000-$200,000)*1,500,000/12,000,000=$162,500.00