On January 1, 2012, Brown Company purchased a mine for $100,000. On this same date, it was estimated that the mine contained 1,000 tons of ore. During 2012, 300 tons of ore were extracted from the mine. The amount of depletion expense for 2012 would be

Question

Quizplus · Accepted Answer

Depletion expense is calculated as cost of the asset ($100,000) divided by estimated total units (1,000 tons), which gives a depletion rate of $100 per ton. The depletion expense for 2012 is then calculated as 300 tons extracted x $100 per ton depletion rate, which equals $30,000. Therefore, the correct answer is D.

On January 1, 2012, Brown Company Purchased a Mine for $100,000