The Weber Company purchased a mining site for $1,750,000 on July 1, 2014. 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 2014 the company extracted 6,500 tons of ore. The depletion expense for 2014 isa. $15,000b. $17,500c. $26,000d. $16,000

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Marquise Rubio

Business

9 July, 21:41

The Weber Company purchased a mining site for $1,750,000 on July 1, 2014. 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 2014 the company extracted 6,500 tons of ore. The depletion expense for 2014 isa. $15,000b. $17,500c. $26,000d. $16,000

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Reyes · Answer 1

c. $26,000

Explanation:

The computation of the depletion expense is shown below:

= (Original cost - residual value) : estimated units or tons * number of tons extracted in a given year

= ($1,750,000 - $150,000) : 400,000 tons * 6,500 tons

= $26,000

We simply subtract the residual value from the original cost and then divide it by total estimated tons. After that, multiply it with the extracted units