Spring Creek Mines purchased a vein of mineral ore for $3,260,000. It is estimated that 20,000,000 tons of ore are available to be extracted. The estimated depletion expense for this year's extraction of 1,770,000 tons of ore is: (Round any intermediary calculations to the nearest cent and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The depletion expense for the year is calculated by dividing the cost of the vein of mineral ore by the total estimated tons and then multiplying by the tons extracted that year.

Depletion expense = (Cost of vein of mineral ore / Total estimated tons) x Tons extracted

Depletion expense = ($3,260,000 / 20,000,000) x 1,770,000
Depletion expense = $0.163 x 1,770,000
Depletion expense = $288,510

Rounding this answer to the nearest dollar gives us a depletion expense of $283,200, which is answer choice D.

Spring Creek Mines Purchased a Vein of Mineral Ore for $3,260,000