O'Keith Corp. purchased a mine on January 1, 2018, for $500,000. The mine is estimated to contain 40,000 tons of iron ore. There is no residual value. The business extracted and sold 8500 tons of ore in 2018 and 11,800 tons of ore in 2019. What is the book value of the mine at the end of 2019? (Round any intermediate calculations to two decimal places, and your final answer to the nearest dollar.)

Question

Quizplus · Accepted Answer

The depletion expense for 2018 = [($500,000 - 0) / 40,000] x 8,500 = $106,250 
The depletion expense for 2019 = [($500,000 - 106,250) / 40,000] x 11,800 = $153,813 
Total depletion expense = $106,250 + $153,813 = $260,063 
Book value of the mine at the end of 2019 = $500,000 - $260,063 = $239,937 
Therefore, the closest option is B) $246,250.