3. On March 31, 2016, M. Belotti purchased the right to remove gravel from an ol

Question

3. On March 31, 2016, M. Belotti purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $207,500, with estimated salable rock of 25,000 tons. During 2016, Belotti loaded and sold 5,900 tons of rock and estimated that 19,100 tons remained at December 31, 2016. At January 1, 2017, Belotti estimated that 11,800 tons still remained. During 2017, Belotti loaded and sold 17700 tons. Belotti would record depletion in 2016 of (Do not round depletion rate per ton) O $64,097 O $48,970. o $36728. O $49175

Explanation / Answer

Total value paid = 207500

Total estimated resources = 25000

Total resources extracted = 5900

Depletion = 5900*207500/25000 = 48970

2. Total cost of mine = 210000+2410000=2620000

Capacity of mine = 2000000 tons

Depletion rate = 1.31 per ton

Cost of equipment = 1821000

Depreciation rate = 1821000/2000000= 0.9105 per ton

2016 2017 Depletion 1.31*310000 406,100 1.31*710000 930,100 Depreciation 0.9105*310000 282,255 0.9105*710000 646,455

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