In February 2014, Brilliant Industries purchased the Topaz Mine at a cost of $100,000,000. The mine is estimated to contain 500,000 carats of stone and to have a residual value of $5,000,000 after mining operations are completed. During 2014, 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 ($100,000,000 - $5,000,000) / 500,000 carats = $190 per carat. For 50,000 carats, the depletion is 50,000 * $190 = $9,500,000.

In February 2014, Brilliant Industries Purchased the Topaz Mine at a Cost