Lane Company acquired a tract of land containing an extractable natural resource. Lane is required by the 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 5,000,000 tons, and that the land will have a value of $1,000,000 after restoration. Relevant cost information follows:
If Lane maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?
A) $1.70
B) $1.50
C) $1.40
D) $1.20

Question

Lane Company acquired a tract of land containing an extractable natural resource. Lane is required by the 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 5,000,000 tons, and that the land will have a value of $1,000,000 after restoration. Relevant cost information follows:
 If Lane maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?
A) $1.70 
B) $1.50 
C) $1.40 
D) $1.20

Quizplus · Accepted Answer

The Answer of Lane Company acquired a tract of land containing an extractable natural resource. Lane is required by the 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 5,000,000 tons, and that the land will have a value of $1,000,000 after restoration. Relevant cost information follows:
 If Lane maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?
A) $1.70 
B) $1.50 
C) $1.40 
D) $1.20

Lane Company Acquired a Tract of Land Containing an Extractable