In calculating depletion of natural resources each period
A)cost depletion must be used.
B)percentage depletion must be used.
C)the greater of cost depletion or percentage depletion must be used.
D)the smaller of cost depletion or percentage depletion must be used.

Question

Quizplus · Accepted Answer

The greater of cost depletion or percentage depletion must be used in calculating depletion of natural resources each period. This is because cost depletion is based on the actual cost incurred to acquire and develop the natural resource, while percentage depletion is a fixed percentage of the gross income earned from the sale of the natural resource. Therefore, using the greater of the two methods ensures that the depletion expense reflects the true economic cost of depleting the natural resource.

In Calculating Depletion of Natural Resources Each Period