Balcom Corporation acquires a coal mine at a cost of $500,000.Intangible development costs total $120,000.After extraction has occurred, Balcom must restore the property (estimated fair value of the obligation is $60,000), after which it can be sold for $170,000.Balcom estimates that 5,000 tons of coal can be extracted.What is the amount of depletion per ton?

Question

Quizplus · Accepted Answer

Depletion = (Cost + Intangible development costs - Residual value) / Estimated tons of coal= (500,000 + 120,000 - 170,000) / 5,000= $102 per ton

Balcom Corporation Acquires a Coal Mine at a Cost of $500,000.Intangible