Depletion Entries Alaska Mining Co. acquired mineral rights for $13,821,000. The

Question

Depletion Entries Alaska Mining Co. acquired mineral rights for $13,821,000. The mineral deposit is estimated at 81,300,000 tons. During the current year, 12,200,000 tons were mined and sold. a. Determine the amount of depletion expense for the current year. Round the depletion rate to two decimals places Feedback Similar to the units-of-production method to depreciate a fixed asset, the depletion rate that is calculated stays constant no matter how much of the natural resource is extracted. Learning Objective 4. b. Journalize the adjusting entry on December 31 to recognize the depletion expense Depletion Expense

Explanation / Answer

Solution:

Depletion expense

= (cost ÷ total estimated minerals) x minerals extracted

= ($13,821,000 ÷ 81,300,000) x 12,200,000

= $2,074,000

b. Depletion expense Dr. $2,074,000

. To accumulated Depletion. $2,074,000

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