Halcour Corporation acquired the right to mine a piece of land at a cost to lease of $600,000. The related excavation costs were $1,000,000, while developmental costs were an additional $8,000,000, all of which will contribute to Halcour extracting 25,000 tonnes. In the first year of operations Halcour mined and sold 5,000 tonnes, while in its second year the company extracted 6,500 tonnes but only sold 6,000 tonnes.
Instructions
Prepare the journal entry to record depletion expense for the first two years.

Question

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The Answer of Halcour Corporation acquired the right to mine a piece of land at a cost to lease of $600,000. The related excavation costs were $1,000,000, while developmental costs were an additional $8,000,000, all of which will contribute to Halcour extracting 25,000 tonnes. In the first year of operations Halcour mined and sold 5,000 tonnes, while in its second year the company extracted 6,500 tonnes but only sold 6,000 tonnes.
Instructions
Prepare the journal entry to record depletion expense for the first two years.

Halcour Corporation Acquired the Right to Mine a Piece of Land