Benson Mining Company purchased a site containing a mineral deposit during 2016. The purchase price was $820,000, and the site is estimated to contain 400,000 tons of extractable ore. Benson constructed a building at the site, at a cost of $500,000, to be used while the ore is being extracted. When the ore reserves are gone, the building will have no further value. Required: A. Explain the objective of recording depletion of natural resources. B. Determine Benson's depletion rate per ton of ore. C. Prepare the journal entry to record depletion for the year 2016, when Benson mined and sold 150,000 tons of ore.

Benson Mining Company purchased a site containing a mineral deposit during 2016. The purchase price was $820,000, and the site is estimated to contain 400,000 tons of extractable ore. Benson constructed a building at the site, at a cost of $500,000, to be used while the ore is being extracted. When the ore reserves are gone, the building will have no further value. Required: A. Explain the objective of recording depletion of natural resources. B. Determine Benson's depletion rate per ton of ore. C. Prepare the journal entry to record depletion for the year 2016, when Benson mined and sold 150,000 tons of ore.

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 6PA: Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one...

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