In February 2009, Brilliant Industries purchased the Topaz Mine at a cost of $10,000,000. The mine is estimated to contain 500,000 carats of stone and to have a residual value of $500,000 after mining operations are completed. During 2009, 50,000 carats of stone were removed from the mine and sold. In this situation:

Question

Quizplus · Accepted Answer

The depletion per carat is calculated as ($10,000,000 - $500,000) / 500,000 carats = $19 per carat. For 50,000 carats, the depletion is 50,000 * $19 = $950,000.

In February 2009, Brilliant Industries Purchased the Topaz Mine at a Cost