Leroy Mining Company purchased land containing an estimated 10,000,000 tons of ore for a cost of $750,000. The land without the ore is estimated to be worth $150,000 (the residual value). Buildings costing $45,000 with an estimated useful life of 20 years were erected on the site. Because of the remote location, the buildings have no residual value. The company expects that all the usable ore can be mined in eight years. During its first year of operation, the company mined 1,000,000 tons of ore and at the end of the year had an inventory of 200,000 tons. Determine the following amounts for the first year: (a) depletion charge per ton; (b) depletion expense for year; and (c) depreciation expense for buildings, using the straight-line method. (Show your work.)

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The Answer of Leroy Mining Company purchased land containing an estimated 10,000,000 tons of ore for a cost of $750,000. The land without the ore is estimated to be worth $150,000 (the residual value). Buildings costing $45,000 with an estimated useful life of 20 years were erected on the site. Because of the remote location, the buildings have no residual value. The company expects that all the usable ore can be mined in eight years. During its first year of operation, the company mined 1,000,000 tons of ore and at the end of the year had an inventory of 200,000 tons. Determine the following amounts for the first year: (a) depletion charge per ton; (b) depletion expense for year; and (c) depreciation expense for buildings, using the straight-line method. (Show your work.)

Leroy Mining Company Purchased Land Containing an Estimated 10,000,000 Tons