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mylen [45]
3 years ago
7

On April 1, Year 1, Fossil Energy Company purchased an oil producing well at a cash cost of $14,740,000. It is estimated that th

e oil well contains 980,000 barrels of oil, of which only 880,000 can be profitably extracted. By December 31, Year 1, 44,000 barrels of oil were produced and sold. The amount of depletion expense for Year 1 on this well would be: (Do not round intermediate calculations.)
Business
1 answer:
leonid [27]3 years ago
6 0

Answer:

$737,000

Explanation:

The computation of amount of depletion expense for Year 1 is shown below:-

Cost per barrel = Cost of oil well ÷ Expected profitable extraction

= $14,740,000 ÷ $880,000

= 16.75

Depletion expenses = Cost per barrel × Barrels of oil

= 16.75 × $44,000

= $737,000

Therefore, for computing the depletion expenses we simply applied the above formula.

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The founder of Alchemy Products Inc. discovered a way to turn gold into lead and patented this new technology. He then formed a
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Answer:

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4 years ago
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