Cameron Corp. purchased a mine on January 1, 2018, for $530,000, which is estimated to contain 35,000 tons of iron ore. There is no residual value. The business extracted and sold 7500 tons of ore in 2018 and 10,800 tons of ore in 2019. What is the depletion expense for 2019?(Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

Depletion expense is calculated using the depletion rate per unit multiplied by the number of units extracted in the current year.

The depletion rate per unit can be calculated as:
Depletion rate per unit = (Cost of mine - Residual value) / Total estimated units of ore
Depletion rate per unit = ($530,000 - $0) / 35,000 = $15.14 per ton

For 2019, the business extracted 10,800 tons of ore, so the depletion expense for 2019 would be:
Depletion expense for 2019 = Depletion rate per unit x Number of units extracted in 2019
Depletion expense for 2019 = $15.14 per ton x 10,800 tons = $163,512

Therefore, the best choice is C, $163,512.