If a mining company extracts 2,000,000 tons in a period but only sells 1,500,000 tons,

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Quizplus · Accepted Answer

Depletion expense is recognized on the 1,500,000 tons that were extracted and sold. This is because depletion is calculated based on the amount of resources that were actually used up or sold, rather than the total amount extracted. Option A would not reflect the full extent of the resources depleted, and option B would overstate the expenses. Option D is not necessary as the depletion expense for the 500,000 tons not sold is already included in the depletion expense for the 1,500,000 tons sold.

If a Mining Company Extracts 2,000,000 Tons in a Period