O'Keith Company purchased a mine on January 1,2018,for $530,000.The mine is estimated to contain 37,000 tons of iron ore.There is no residual value.The business extracted and sold 2500 tons of ore in 2018 and 19,800 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

Depletion per unit = (Cost - Residual value) / Estimated total units
Depletion per unit = ($530,000 - $0) / 37,000 = $14.32 per ton
Depletion expense = Depletion per unit × Number of units extracted
Depletion expense for year 2018 = $14.32 × 2500 tons = $35,800
Depletion expense for year 2019 = $14.32 × 19,800 tons = $283,536
Book value of mine at the end of year 2019 = $530,000 - $35,800 - $283,536 = $210,664

O'Keith Company Purchased a Mine on January 1,2018,for $530,000