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gregori [183]
4 years ago
11

The Weber Company purchased a mining site for $1,750,000 on July 1. The company expects to mine ore for the next 10 years and an

ticipates that a total of 400,000 tons will be recovered. The estimated residual value of the property is $150,000. During the first year, the company extracted 6,500 tons of ore. The depletion expense is
Business
1 answer:
AlladinOne [14]4 years ago
4 0

Answer:

The correct solution is "$26,000".

Explanation:

The given values are:

Cost

= $1,750,000

Salvage value

= $150,000

First Year Extraction

= 6,500

Total Extraction

= 400,000

Now,

⇒ Depletion \ Expense = (Cost - Salvage \ value)\times (\frac{First \ Year \ Extraction}{Total \ extraction} )

On putting the values, we get

⇒                                = (1,750,000 - 150,000)\times (\frac{6,500}{400,000} )

⇒                                = 1,600,000\times 0.01625

⇒                                = 26,000 ($)  

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