On July 4, 2018, Wyoming Mining Company purchased the mineral rights to a granite deposit for $1,600,000. It is estimated that the recoverable granite will be 400,000 tons. During 2018, 100,000 tons of granite was extracted and 60,000 tons were sold. The amount of the Depletion Expense recognized for 2018 would be:
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Answer:
The amount of the Depletion Expense recognized for 2018 would be 240,000
Explanation:
In order to calculate The amount of the Depletion Expense recognized for 2018, we have to calculate first the depletion expense per ton.
Hence, Depletion expense per ton = $1,600,000/400,000 = 4
Therefore, if the Depletion expense per ton is 4, and during 2018 60,000 tons of granite were sold then the Depletion expense to be recognized for 2018 will be=60,000*4
= $240,000. Amount of the Depletion Expense recognized for 2018