A company purchased a tract of land for its natural resources at a cost of $1,000,000. It expects to harvest 5,000,000 board feet of timber from this land. The salvage value of the land is expected to be $200,000. The depletion expense per board foot of timber is:

Question

Quizplus · Accepted Answer

The depletion expense per board foot is calculated by subtracting the salvage value from the cost and then dividing by the total board feet: ($1,000,000 - $200,000) / 5,000,000 = $0.16.

A Company Purchased a Tract of Land for Its Natural