In 2015, Ellie Co. purchased property with natural resources for 28,000,000. The

Question

In 2015, Ellie Co. purchased property with natural resources for 28,000,000. The property had a residual value if 5,000,000. However the entity is required to restore the property to the original condition at a discounted amount of 2,000,000. In 2015, the entity spent 1,000,000 in development cost and 3,000,000 in building. In 2016, 4,000,000 was spent for additional development of the mine. Production began in 2016 and 3,000,000 tons were extracted in 2016 and 2,500,000 tons in 2017. The remaining tons totaled 7,000,000 and 3,500,000 respectively on December 31 2016 and 2017.
What amount of depletion should be recognized in 2017?
A. 10,500,000 B. 12,250,000 C. 9,000,000 D. 8,750,000
In 2015, Ellie Co. purchased property with natural resources for 28,000,000. The property had a residual value if 5,000,000. However the entity is required to restore the property to the original condition at a discounted amount of 2,000,000. In 2015, the entity spent 1,000,000 in development cost and 3,000,000 in building. In 2016, 4,000,000 was spent for additional development of the mine. Production began in 2016 and 3,000,000 tons were extracted in 2016 and 2,500,000 tons in 2017. The remaining tons totaled 7,000,000 and 3,500,000 respectively on December 31 2016 and 2017.
What amount of depletion should be recognized in 2017?
A. 10,500,000 B. 12,250,000 C. 9,000,000 D. 8,750,000
In 2015, Ellie Co. purchased property with natural resources for 28,000,000. The property had a residual value if 5,000,000. However the entity is required to restore the property to the original condition at a discounted amount of 2,000,000. In 2015, the entity spent 1,000,000 in development cost and 3,000,000 in building. In 2016, 4,000,000 was spent for additional development of the mine. Production began in 2016 and 3,000,000 tons were extracted in 2016 and 2,500,000 tons in 2017. The remaining tons totaled 7,000,000 and 3,500,000 respectively on December 31 2016 and 2017.
What amount of depletion should be recognized in 2017?
A. 10,500,000 B. 12,250,000 C. 9,000,000 D. 8,750,000

Explanation / Answer

Answer: Depletion rate per unit =Cost of natural resources-Residual value/Estimated Recoverable units

Total depletion cost=Uint depletion rate*Units extracted

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.