On July 4, 2011, Wyoming Mining Company purchased the mineral rights to a granite deposit for $1,200,000.It is estimated that the recoverable granite will be 400,000 tons.During 2010, 100,000 tons of granite was extracted and 60,000 tons were sold.The amount of the Depletion Expense recognized for 2011 would be

Question

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First, we need to calculate the depletion rate per ton:

Depletion rate per ton = ($1,200,000 cost - $0 residual value) / 400,000 tons
Depletion rate per ton = $3 per ton

Next, we need to calculate the total depletion expense for the year:

Depletion expense = depletion rate per ton x tons extracted in the year
Depletion expense = $3 per ton x 100,000 tons
Depletion expense = $300,000

However, we also need to take into account the 60,000 tons that were sold during the year. We need to subtract the depletion expense for those tons since they no longer contribute to the total amount of recoverable granite:

Depletion expense for sold tons = depletion rate per ton x tons sold
Depletion expense for sold tons = $3 per ton x 60,000 tons
Depletion expense for sold tons = $180,000

Total depletion expense for the year = $300,000 - $180,000 = $120,000

Therefore, the answer is C) $180,000.

On July 4, 2011, Wyoming Mining Company Purchased the Mineral