During 2010,a company purchased a mine at a cost of $3,000,000.The company spent an additional $600,000 getting the mine ready for its intended use.It is estimated that 300,000 tons of mineral can be removed from the mine and the residual value of the mine will be $600,000.During 2010,45,000 tons of mineral were removed from the mine and 35,000 tons were sold.Which of the following statements is correct with respect to the accounting for the mine?
A)The 2010 net income decreased $450,000 as a result of the mining during the year.
B)The book value of the mine decreased $350,000 during 2010.
C)The inventory of minerals increased $450,000 during 2010.
D)The 2010 cost of goods sold was $350,000.

Question

Quizplus · Accepted Answer

Depletion rate per ton ($10) = ($3,000,000 + $600,000 - $600,000) F1F1F1S1F1F1F10 300,000Cost of goods sold ($350,000) = $10 F1F1F1S1F1F1F10 35,000

During 2010,a Company Purchased a Mine at a Cost of $3,000,000.The