The Weber Company purchased a mining site for $1,600,000 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. During the first year, the company extracted 6,500 tons of ore. The depletion expense is
A) $17,500
B) $16,000
C) $26,000
D) $15,000

Question

Quizplus · Accepted Answer

Depletion Rate = Cost of Resource / Estimated Total Units of Resource = $1,600,000 / 400,000 = $4
Depletion Expense = Depletion Rate × Quantity Extracted = $4 × 6,500 tons = $26,000

The Weber Company Purchased a Mining Site for $1,600,000 on July