In January, 2010, Yoder Corporation purchased a mineral mine for $3,400,000 with

Question

In January, 2010, Yoder Corporation purchased a mineral mine for $3,400,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $200,000 after the ore has been extracted. The company incurred $1,000,000 of development costs preparing the mine for production. During 2010, 500,000 tons were removed and 400,000 tons were sold. What is the amount of depletion that Yoder should expense for 2010?
a. $640,000
b. $800,000
c. $840,000
d. $1,120,000

Explanation / Answer

Units-of-Activity Depletion

Per Unit Depletion Cost = Depletable cost / Unit of Resource

= ($3,400,000 + $1,000,000 - $200,000) / 2,000,000 tons
= $4,200,000 / 2,000,000   = $2.10

Amount of depletion that Yoder should expense for 2010 = 400,000 X 2.10
       = $840,000

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.