In 2010, CopperCo Corporation purchased a mine for $200 million ($30 million were applicable to the land).An independent evaluation estimated the mine's reserves at 7.5 million tons. In 2010, CopperCo extracted 0.9 million tons.The company's depletion expense for 2010 is:

Question

Quizplus · Accepted Answer

First, we need to calculate the depletion rate per ton:
Depletion rate per ton = (Cost - Land value) / Estimated reserves
Depletion rate per ton = ($200 mill - $30 mill) / 7.5 million tons
Depletion rate per ton = $22.67/ton

Then, we can calculate the depletion expense for 2010:
Depletion expense = depletion rate per ton x tons extracted
Depletion expense = $22.67/ton x 0.9 million tons
Depletion expense = $20.4 million.

Therefore, the correct answer is D.

In 2010, CopperCo Corporation Purchased a Mine for $200 Million