The depletion expense of the coal mine can b calculated using the following formula:
Depletion expense for the year = (Cost of mine – Salvage value) * (Tons of coal sold in the year / Total Tons Capacity of the mine)
Given information:
Cost of mine = $2,000,000
Salvage value = 0
Tons of coal sold in the year = 220,000 tons
Total Tons Capacity of the mine = 2,000,000 tons
So, Depletion expense for the year = (2,000,000-0)*(220,000/2,000,000) = $220,000
Hence, the Depletion expense for the first year is <u>$220,000</u>
