Seymor Resources Company acquired a tract of land containing an extractable natural resource. Seymor is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2,000,000 tons, and that the land will have a value of $1,200,000 after restoration. Relevant cost information follows:
If Seymor maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?
A) $3.90
B) $4.50
C) $4.80
D) $5.40

Question

Seymor Resources Company acquired a tract of land containing an extractable natural resource. Seymor is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2,000,000 tons, and that the land will have a value of $1,200,000 after restoration. Relevant cost information follows:
 If Seymor maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?
A) $3.90 
B) $4.50 
C) $4.80 
D) $5.40

Quizplus · Accepted Answer

The Answer is C

Seymor Resources Company Acquired a Tract of Land Containing an Extractable