ACCT 201 Principles of Financial Accounting Practice Exam - Chapter 8 Reporting & Analyzing Long-Term Assets Dr. Fred Barbee Solution to Short-Problem #3

Short Problem #3

A company purchased and sold mining property containing 15,000,000 tons of ore for $4,875,000. In July 2001 it mined and sold 789,000 tons of ore and in 2002 it mined and sold 1,235,000 tons. Calculate the depletion expense for 2001 and 2002.

Solution:

$4,875,000 / 15,000,000 tons = $0.325 per ton. 2001: 789,000 tons x $0.325 per ton = $256,425 2002: 1,235,000 tons x $0.325 per ton = $401,375