Question

A company purchased land for its natural resources at a cost $1,500,000. It expects to mine 2,000,000 tons of one from this land. The residual value of the land is estimated to be $250,000 what is the amount of depletion per ton of one?
a. $0.75
b. $0.875
c. $1.14
d. $0.625

Answer 1

Answer:

Depletion= $0.625

Explanation:

Giving the following information:

Purchase land= $1,500,000.

It expects to mine 2,000,000 tons of one from this land.

The residual value of the land is estimated to be $250,000.

To calculate the depletion per ton, we need to use the following formula:

Depletion= [(purchase cost - salvage value)/useful life of production

Depletion= (1,500,000 - 250,000) / 2,000,000

Depletion= $0.625