Engineering Economy 7th Edition by Leland Blank ,Anthony Tarquin

Exercise 41

A coal mine purchased 3 years ago for $7 million was estimated to contain 4,000,000 tons of coal. During the past 3 years the amount of coal removed was 21,000, 18,000, and 20,000 tons, respectively. The gross income obtained in these 3 years was $257,000 for the first year, $320,000 for the second year, and $340,000 for the third year. Determine (a) the cost depletion allowance for each year and (b) the percentage of the purchase price depleted thus far.