Complete question :
Solare Company acquired mineral rights for $729,600,000. The diamond deposit is estimated at 45,600,000 tons. During the current year, 2,050,000 tons were mined and sold.
Determine the depletion rate. Determine the amount of depletion expense for the current year. Journalize the adjusting entry to recognize the depletion expense..
Answer: 1) $16 ; $32,800,000
Explanation:
Given the following :
Cost of mineral right = $729,600,000
Estimated deposit = 45,600,000 tons
Quantity sold mined and sold during current year = 2,050,000 tons
Depletion rate :
Cost of mineral right / Estimated volume of deposit
= $729,600,000 / 45,600,000
= $16
B) depletion expense for current year:
Depletion rate × quantity sold and mined in current year
$16 × 2,050,000
= $32,800,000
C.) Depletion expense - - - 32,800,000
Accumulated depletion - - 32,800,00
