On June 1, 2019, Martin Products purchased a silver mine for $3,000,000. Costs to further explore and develop the mine totaled $1,500,000. The value of the mine once mining operations are completed is expected to total $1,000,000. Martin Products expects to extract 1,250,000 tons of ore from the mine. During 2019, 150,000 tons of ore were extracted. 80,000 tons were sold to another company for further processing.
What is the depletion rate for Martin Products?

Question

Quizplus · Accepted Answer

Depletion per unit = ($3,000,000 +1,500,000-1,000,000) / 1,250,000 tons = $2.80

On June 1, 2019, Martin Products Purchased a Silver Mine