Question

On March 25, Parscale Company purchases the rights to a mineral interest for $8,519,000. At that time, the remaining recoverable units in the mineral interest are estimated to be 849,300 tons. If required, round any division to two decimal places and use in subsequent computations. Round your final answer to the nearest dollar. Of 764,370 tons are mined and 127,395 tons are sold this year, calculate Parscale's cost depletion for the yea

Answer 1

Answer:

$7,667,100

Explanation:

Step 1 : Determine Depletion Rate

Depletion Rate = Cost ÷ Estimated units

                          = $8,519,000 ÷ 849,300 tons

                          = $10.03

Step 2 : Determine the Depletion Cost

Depletion Cost  = Depletion Rate x units mined

                          = $10.03 x 764,370 tons

                          = $7,667,100

Conclusion :

Parscale's cost depletion for the year is $7,667,100