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The Weber Company purchased a mining site for $1,750,000 on July 1. The company expects to mine ore for the next 10 years and anticipates that a total of 400,000 tons will be recovered. The estimated residual value of the property is $150,000. During the first year, the company extracted 6,500 tons of ore. The depletion expense is

Respuesta :

Answer:

The correct solution is "$26,000".

Explanation:

The given values are:

Cost

= $1,750,000

Salvage value

= $150,000

First Year Extraction

= 6,500

Total Extraction

= 400,000

Now,

⇒ [tex]Depletion \ Expense = (Cost - Salvage \ value)\times (\frac{First \ Year \ Extraction}{Total \ extraction} )[/tex]

On putting the values, we get

⇒                                = [tex](1,750,000 - 150,000)\times (\frac{6,500}{400,000} )[/tex]

⇒                                = [tex]1,600,000\times 0.01625[/tex]

⇒                                = [tex]26,000[/tex] ($)  

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