The proper accounting for natural resources is to record the original cost as an:
A)asset,then later transfer amounts to Inventory as the resource is depleted,and finally expense the cost as the resources are sold.
B)asset,then expense the cost over its useful life.
C)expense in the period purchased.
D)asset,and then expense the cost over its useful life using straight-line depreciation.

Question

Quizplus · Accepted Answer

Because depletion of the natural resource is necessary to obtain the inventory,the depletion computed during a period is added to the cost of the inventory,not expensed in the period.The Inventory remains as an asset on the balance sheet until it is sold,at which time its cost is removed from the balance sheet and reported on the income statement as an expense called Cost of Goods Sold.

The Proper Accounting for Natural Resources Is to Record the Original