Depletion is the process of allocating the cost of natural resources to expense over the period in which the resource produces revenue.

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Depletion is a commonly used accounting method for natural resources such as oil, gas, minerals, timber, and other assets that have a limited useful life. The purpose of depletion is to spread the cost of the resource over the period in which it is expected to generate revenue. This way, the company can accurately reflect the true cost of producing the revenue and avoid overstating its profits in any one year.

Depletion Is the Process of Allocating the Cost of Natural