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    Depletion Expense

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    A company purchased oil rights on July 1, 2008 $1,200,000. If 200,000 barrels of oil are expected to be extracted over the assets life, and 30,000 barrels are extracted and sold in 2008, the recognition of depletion expense on December 31, 2008 would cause what?

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    Solution Preview

    The depletion amount per barrel is 1,200,000/200,000 = $6 per barrel

    In 2008 30,000 barrels are ...

    Solution Summary

    The solution explains the calculation of depletion expense and its impact on the balance sheet.