Steel Rolling Company purchased a mine on January 1, 2015, for $500,000,which holds an estimated 30,000 tons of iron ore. The company expects the asset to have zero residual value. The company has extracted 2,500 tons of ore in 2015 and 3,800 tons of ore in 2016. What is depletion expense for 2015? (Do not round your intermediate calculations).

Question

Quizplus · Accepted Answer

The depletion expense for 2015 is calculated by dividing the purchase cost by the total estimated tons and then multiplying by the tons extracted in 2015: ($500,000 / 30,000 tons) * 2,500 tons = $41,667.

Steel Rolling Company Purchased a Mine on January 1, 2015