On January 1,Year 1,Monroe Minerals Company purchased a copper mine for $120,000,000.The mine was expected to produce 50,000 tons of copper over its useful life.During Year 1,the company extracted 6,000 tons of copper.The copper was sold for $4,500 per ton.Assume that the company incurred $8,040,000 in operating expenses during Year 1.What is the amount of net income for Year 1?
A)$12,600,000
B)$4,560,000
C)$6,360,000
D)$14,400,000

Question

Quizplus · Accepted Answer

Unit depletion charge = Cost of $12,000,000 ÷ Estimate of 50,000 tons = $2,400 per ton
Depletion expense = Tons extracted during year of 6,000 × $2,400 per ton = $14,400,000
Net income = Revenue of (6,000 tons × $4,500 per ton)? Depletion expense of $14,400,000 - Operating expenses of $8,040,000 = $4,560,000

On January 1,Year 1,Monroe Minerals Company Purchased a Copper Mine