When a company records the cost of cutting down timber for example this cost is deemed to be :
A) exploration cost.
B) asset retirement obligation.
C) development cost.
D) depletion cost.

Question

Quizplus · Accepted Answer

Depletion cost is the cost of using up natural resources such as timber, oil, or minerals. Cutting down timber involves using up the natural resource, and therefore the cost incurred is considered as depletion cost.

When a Company Records the Cost of Cutting Down Timber