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Anna [14]
3 years ago
11

Santa Fe purchased the rights to extract turquoise on a tract of land over a five-year period. Santa Fe paid $429,000 for extrac

tion rights. A geologist estimates that Santa Fe will recover 6,500 pounds of turquoise. During the current year, Santa Fe extracted 1,950 pounds of turquoise, which it sold for $277,000. What is Santa Fe's cost depletion expense for the current year?
A) $85,800B) $128,700
C) $156,440
D) $429,000
E) None of these
Business
1 answer:
notsponge [240]3 years ago
8 0

Answer:

Option B $128700

Explanation:

The amortization can be calculated using the following formula:

Amortization for the Year = Assets Value * (Turquoise Extracted / Total Turquoise)

Amortization for the Year = $429,000 * (1950/6,500) = $128,700

The method used is depletioning method because it seems that the company will extract all of the turquoise within the 3.33 year time (6500/1950), which is within the 5 years duration for which the right to extract the turquoise is purchaseed. Otherwise the straigth line method would had be used here.

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4 0
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An increase in the real wage rate decreases the quantity of labor demanded, increases the quantity of labor supplied, and when the labor market is in equilibrium, equates demand and supply of labor.

<h3>What is real wage rate?</h3>

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3 0
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