Exhibit 11-04 Kieso Company purchased a tract of land for $4,500,000 in anticipation of extracting 1,425,000 tons of ore. The residual value of the land is expected to be $480,000. The company mines 125,000 tons of ore in the first year.
-Refer to Exhibit 11-04, what amount of depletion was recorded in that first year?

Question

Quizplus · Accepted Answer

Depletion per ton = ($4,500,000 - $480,000) / 1,425,000 tons = $3.00/ton
Depletion expense for the first year = 125,000 tons x $3.00/ton = $375,000.
Therefore, choice B is the correct answer.

Exhibit 11-04 Kieso Company Purchased a Tract of Land for $4,500,000