In 2017, Elk Corporation purchased a mine for $200 million (of this, $30 million was applicable to the land).An independent evaluation estimated the mine's reserves at 7.5 million tons.During 2017, Elk extracted 900,000 tons.Elk's depletion expense for 2017 is

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Depletion expense = (Cost of mine - Land value) * Tons extracted / Estimated tons of reserves= ($200,000,000 - $30,000,000) * 900,000 / 7,500,000= $20,400,000

In 2017, Elk Corporation Purchased a Mine for $200 Million