assignment essor toca tor - takeänprogress -false Q?n eBook Calculator Cornersto

Question

assignment essor toca tor - takeänprogress -false Q?n eBook Calculator Cornerstone Exercise 7-27 (Algorithmic) Depletion of Natural Resources Brandon Oil Company recently purchased oil and natural gas reserves in a remote part of Alaska for $800,000. Brandon spent $10,000,000 preparing the oil for extraction from the ground. Brandon estimates that 120,000,000 barrels of oil will be extracted from the ground. The land has a residual value of $20,000. During 2019, 15,170,000 barrels are extracted from the ground. Required: Calculate the amount of depletion taken in 2019. (Note: In your calculations, round depletion per barrel to two decimal places.) Feedback Y Check My Work Depletion calculations are similar to the units-of-production method of depreciation 813 PM /8/2018

Explanation / Answer

Depletion per barrel = (800,000 + 10,000,000)/ 120,000,000 = 0.15 per barrel

Depletion during the year = 0.15 * 15,170,000 = 2,275,500

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