In 2009 , Kallen Enterprises purchased an oil well for $12,000,000. It is estimated that 80,000,000 barrels can be extracted from the well. Depletion expense during 2010 , when 2,000,000 barrels were extracted and sold, totaled

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The depletion expense is calculated by dividing the purchase cost by the total estimated barrels and then multiplying by the number of barrels extracted. ($12,000,000 / 80,000,000 barrels) * 2,000,000 barrels = $300,000.

In 2009 , Kallen Enterprises Purchased an Oil Well for $12,000,000