Question

national Mining Corp. purchased a​ mine, which holds an estimated 031,000 tons of iron​ ore, on January​ 1, 2018, for $ 526,000. The mine is expected to have zero residual value. The business extracted and sold 12,500 tons of ore in 2018 and 11,800 tons of ore in 2019. What is the depletion expense for​ 2018? (Round any intermediate calculations to two decimal​ places, and your final answer to the nearest​ dollar.)

Answer 1

Answer:

depletion expense for 2018 6,019.18

Explanation:

$526,000 cost

1,031,000 tons

We have a cost(the mine) which is associate with an asset  available, that will be depleted over time (iron ore)

So we have to distribute this cost at the rate this asset is being depleted:

cost/tonds of iron ore = depletion per ton

526,000/1,031,000 = 0.5101

Then we multiply this rate by the extracted amount of 2018

depletion expense for 2018

0.5101 x 11,800 = 6,019.18