Question

Coal Miner Co. acquired coal rights for $100,000,000. It is estimated that there are 2,500,000 tons of the resource, and during the current year 500,000 tons were mined and sold. What is the amount of depletion for the current year?

Answer 1

Answer:

$20,000,000

Explanation:

Depletion expense

= (cost / total estimated minerals) x minerals extracted

(100,000,000 / 2,500,000) x 500,000

= $20,000,000