A business will have depletion expense only if it has ________.
A)current assets that are consumed during the period
B)property,plant,and equipment that are used in operating activities
C)natural resources like timber and oil
D)intangible assets like copyrights and trademarks

Question

Quizplus · Accepted Answer

Depletion expense is incurred when a company extracts or depletes natural resources such as timber, oil, and minerals from the earth. Option A is incorrect because current assets are typically consumed or used up during the current accounting period, but they are expensed through different methods such as cost of goods sold or operating expenses. Option B is incorrect because property, plant, and equipment are expensed through depreciation over the useful life of these assets. Option D is incorrect because intangible assets are expensed through amortization over their useful life or legal life, whichever is shorter.

A Business Will Have Depletion Expense Only If It Has