A company purchased land for its natural resources at a cost of $1,550,000. It e

Question

A company purchased land for its natural resources at a cost of $1,550,000. It expects to mine 2,125,000 tons of ore from this land. The residual value of the land is estimated to be $325,000. What is the amount of depletion per ton of ore?

$0.576

$0.729

$0.882

$1.133

A company purchased land for its natural resources at a cost of $1,550,000. It expects to mine 2,125,000 tons of ore from this land. The residual value of the land is estimated to be $325,000. What is the amount of depletion per ton of ore?

Explanation / Answer

Amount of depletion per ton of ore=(Cost-Residual value)/Total tons

which is equal to

=(1,550,000-325000)/2,125,000

=$0.576(Approx)(A).

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