On January 1,2015, GOGO Company purchased land with valuable natural ore deposits for $20,000,000. At that time, the estimated recoverable output from the mine is $4,000,000 metric tons of ore after which the land is expected to have residual value of $3,000,000. To facilitate the extraction and transportation of the ore, roads were constructed amounting to $1,500,000. In 2015, 2,000,000 metric tons were mined. At the end of 2016, a new estimate of remaining recoverable ore indicated 2,500,000 metric tons are available. During 2016, 1,500,000 metric tons were mined. How much is the depletion expense for the year 2016?
On January 1,2015, GOGO Company purchased land with valuable natural ore deposits for $20,000,000. At that time, the estimated recoverable output from the mine is $4,000,000 metric tons of ore after which the land is expected to have residual value of $3,000,000. To facilitate the extraction and transportation of the ore, roads were constructed amounting to $1,500,000. In 2015, 2,000,000 metric tons were mined. At the end of 2016, a new estimate of remaining recoverable ore indicated 2,500,000 metric tons are available. During 2016, 1,500,000 metric tons were mined. How much is the depletion expense for the year 2016?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 19E
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On January 1,2015, GOGO Company purchased land with valuable natural ore deposits for $20,000,000. At that time, the estimated recoverable output from the mine is $4,000,000 metric tons of ore after which the land is expected to have residual value of $3,000,000. To facilitate the extraction and transportation of the ore, roads were constructed amounting to $1,500,000.
In 2015, 2,000,000 metric tons were mined. At the end of 2016, a new estimate of remaining recoverable ore indicated 2,500,000 metric tons are available. During 2016, 1,500,000 metric tons were mined.
How much is the depletion expense for the year 2016?
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