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    Depletion Expense

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    In January, 2007, M Corporation purchased a mineral mine for $3,400,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $200,000 after the ore has been extracted. The company incurred $1,000,000 of development costs preparing the mine for production. During 2007, 500,000 tons were removed and 400,000 tons were sold.

    What is the amount of depletion that M Corp should expense for 2007?

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    Solution Preview

    The cost of the mine would be the purchase price plus the development cost = ...

    Solution Summary

    The solution explains how to calculate the amount of depletion expense.