On June 6, 2011, Wood Co. bought timber rights for the following stand of timber

Question

On June 6, 2011, Wood Co. bought timber rights for the following stand of timber: Cost       5,000,000 Cost to develop site         100,000 Estimated lumber in board feet       1,500,000 During 2011, 780,000 board feet of lumber was cut and sold. Depletion expense for 2011 would be: A. 2,597,400 B. 2,652,000 C. 5,100,000 D.      780,000 On June 6, 2011, Wood Co. bought timber rights for the following stand of timber: Cost       5,000,000 Cost to develop site         100,000 Estimated lumber in board feet       1,500,000 During 2011, 780,000 board feet of lumber was cut and sold. Depletion expense for 2011 would be: A. 2,597,400 B. 2,652,000 C. 5,100,000 D.      780,000

Explanation / Answer

Depletion expense= (5100000/1500000)*780000= 2652000 (B)

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