If a mining company extracts 1,500,000 tonnes in a period but only sells 1,200,000 tonnes,
A) accumulated depreciation on the mine is based on the 1,200,000 tonnes.
B) depreciation included in cost of goods sold is based on the 1,500,000 tonnes extracted.
C) depreciation included in cost of goods sold is based on the 1,200,000 tonnes extracted and sold.
D) a separate accumulated depreciation account is set up to record depreciation on the 300,000 tonnes extracted but not sold.

Question

Quizplus · Accepted Answer

Depreciation included in cost of goods sold is based on the amount extracted and sold, which is 1,200,000 tonnes in this case.

If a Mining Company Extracts 1,500,000 Tonnes in a Period