A company purchased land for its natural resources at a cost of $1,570,000. It e
ID: 2369506 • Letter: A
Question
A company purchased land for its natural resources at a cost of $1,570,000. It expects to mine 2,175,000 tons of ore from this land.The residual value of the land is estimated to be $355,000. What is the amount of depletion per ton of ore?(Round your answer to 3 decimal places.)
A company purchased land for its natural resources at a cost of $1,570,000. It expects to mine 2,175,000 tons of ore from this land.The residual value of the land is estimated to be $355,000. What is the amount of depletion per ton of ore?(Round your answer to 3 decimal places.)
Explanation / Answer
Depreciable cost = Original cost - salvage value
= $1,570,000 -$355,000= $1,215,000
The depletion expense per ton of ore is$1,215,000/2,175,000= $0.5586
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