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On April 23, 2018, Trevors Mining Entered into an Agreement

Question 63

Multiple Choice

On April 23, 2018, Trevors Mining entered into an agreement with the state of California to obtain the rights to operate a mineral mine in California for $12 million. Additional costs and purchases included the following:  Preparation of site for excavation $4,800,000 Mining equipment 360,000 Construction of various structures on site 240,000\begin{array}{lr}\text { Preparation of site for excavation } & \$ 4,800,000 \\\text { Mining equipment } & 360,000 \\\text { Construction of various structures on site } & 240,000\end{array} After the minerals are removed from the mine, the equipment will be sold for an estimated residual value of $60,000. The structures will be torn down. The mine is expected to produce 1,400,000 tons of ore. After the ore is removed, the land will revert back to the state of California. During 2018, Trevors extracted 210,000 tons of ore from the mine. What total amount would be charged to depletion of the mine and depreciation of the mining equipment and structures for 2018, assuming that Trevors uses the units-of-production method for both depletion and depreciation? (Round your final calculations to the nearest whole thousand dollars.)


A) $2,601,000.
B) $2,520,000.
C) $2,610,000.
D) $2,565,000.

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