Steel Rolling Corp.purchased a mine,which holds an estimated 38,000 tons of iron ore,on January 1,2017,for $538,000.The mine is expected to have zero residual value.The business extracted and sold 15,500 tons of ore in 2017 and 8,800 tons of ore in 2018.What is the depletion expense for 2017? (Round any intermediate calculations to two decimal places,and your final answer to the nearest dollar. )

Question

Quizplus · Accepted Answer

Depletion per unit = (Cost - Residual value)/ Estimated total units
Depletion per unit = ($538,000 - $0)/ 38,000 tons = $14.16 per ton
Depletion expense = Depletion per unit × Number of units extracted
Depletion expense for year 2017 = $14.16 × 15,500 tons = $219,480