Question

Mining Corporation bought land for $330,000 (residual value $22,000) that is estimated to yield 660,000 pounds of a removable natural resource. The amounts of natural resources extracted in 2020 and 2021 were 77,000 and 99,000 pounds, respectively. Determine depletion for 2020 and for 2021

Answer 1

35933

$46,200

Step-by-step explanation:

Depletion = amount of pounds extracted x depletion factor

depletion factor = (cost of asset - salvage value) / estimated yield

(330,000 - 22,000) / 660,00 = 0.467

2021 = 0.467 x 99,000 = $46,200