A coal mine cost $1,001,000 and is estimated to hold 58,000 tons of coal.There is no residual value.During the first year of operations,6000 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 per unit = (Cost - Residual value) / Estimated total units
Depletion per unit = ($1,001,000 - 0) / 58,000 tons = $17.26 per ton
Depletion expense = Depletion per unit × Number of units extracted
Depletion expense = $17.26 × 6000 tons = $103,560

A Coal Mine Cost $1,001,000 and Is Estimated to Hold