Question

Perez Company acquires an ore mine at a cost of $2,940,000. It incurs additional costs of $823,200 to access the mine, which is estimated to hold 2,100,000 tons of ore. 235,000 tons of ore are mined and sold the first year. The estimated value of the land after the ore is removed is $420,000. Calculate the depletion expense from the information given. 1.

Answer 1

Answer:

$1,500,000

Explanation:

Step 1 : Determine depletion rate

Depletion rate = $3.57

Step 2 : Depletion expense