In February 2018,Gemstone Industries purchased the Opal Mine at a cost of $20,000,000.The mine is estimated to contain 500,000 carats of stone and to have a residual value of $1,000,000 after mining operations are completed.During 2018,50,000 carats of stone were removed from the mine and sold.In this situation:

Question

Quizplus · Accepted Answer

The depletion per carat is calculated as ($20,000,000 - $1,000,000) / 500,000 carats = $38 per carat. For 50,000 carats, the depletion is 50,000 * $38 = $1,900,000.

In February 2018,Gemstone Industries Purchased the Opal Mine at a Cost