Depletion: It refers to the process of proportionately distributing the cost of the extracting natural resources such as coal, mines, and petroleum from the earth to the number of units extracted. The following is the formula to calculate the depletion expense:
To record: the
To record: the journal entry for the additional cost related to oil and gas properties.
To record: the journal entry for the depletion expense for oil and gas properties.
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- Weber Company purchased a mining site for $585,330 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 81,102 tons will be recovered. The estimated residual value of the property is $51,152. During the first year, the company extracted 4,503 tons of ore. The depletion expense is a.$32,499.09 b.$29,658.99 c.$53,417.80 d.$51,152.00arrow_forwardOn April 17 of the current year, a mining company purchased the rights to a mine. The purchase price plus additional costs necessary to prepare the mine for extraction of minerals totaled $6,300,000. The company expects to extract 1,050,000 tons of minerals during a four-year period. During the current year, 255,000 tons were extracted and sold immediately. Required: 1. Calculate depletion for the current year. 2. Is depletion considered part of the product cost and included in the cost of inventory? 1. Depletion for the current year 2. Is depletion considered part of the product cost and included in the cost of inventory?arrow_forwardWeber Company purchased a mining site for $525,247 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 85,242 tons will be recovered. The estimated residual value of the property is $49,377. During the first year, the company extracted 4,550 tons of ore. The depletion expense is Oa. $47,587.00 Ob. $25,400.72 Oc. $28,036.34 Od. $49,377.00arrow_forward
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