A coal mine was acquired for $4,000,000.No salvage value was expected and the number of tons of coal is estimated to be 2,000,000 tons.During for first year,200,000 tons of coal was mined and sold.The depletion expense is:

Question

Quizplus · Accepted Answer

The depletion expense is calculated by dividing the total cost by the total estimated tons and then multiplying by the tons mined. ($4,000,000 / 2,000,000 tons) * 200,000 tons = $400,000.

A Coal Mine Was Acquired for $4,000,000