A coal mine cost $1,003,000 and is estimated to hold 54,000 tons of coal. There is no residual value. During the first year of operations, 11,000 tons are extracted and sold. Calculate depletion expense for the first year. (Round any intermediate calculations to the nearest cent.)

Question

Quizplus · Accepted Answer

Depletion expense per unit = (Cost - Residual Value) / Total estimated units = (1,003,000 - 0) / 54,000 = $18.57 per ton.
Depletion expense for the first year = Depletion expense per unit x Units extracted and sold = $18.57 per ton x 11,000 tons = $204,270. Therefore, the correct answer is option D.

A Coal Mine Cost $1,003,000 and Is Estimated to Hold