4. Exercise 11-11 Depletion [LO11-3] On April 17, 2013, the Loadstone Mining Com
ID: 2358327 • Letter: 4
Question
4.
Exercise 11-11 Depletion [LO11-3]
On April 17, 2013, the Loadstone Mining Company purchased the rights to a coal mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the coal totaled $4,600,000. The company expects to extract 920,000 tons of coal during a four-year period. During 2013, 242,000 tons were extracted and sold immediately.
On April 17, 2013, the Loadstone Mining Company purchased the rights to a coal mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the coal totaled $4,600,000. The company expects to extract 920,000 tons of coal during a four-year period. During 2013, 242,000 tons were extracted and sold immediately.
Explanation / Answer
4,600,000/920,000 = $5 per ton $5 per ton*242,000 tones = $1,210,000 Answer: $1,210,000
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