lo 5 pittsburg resources acquired a coal mine for $6,000,000. the companys survey estimates that 120,000…

lo 5 pittsburg resources acquired a coal mine for $6,000,000. the companys survey estimates that 120,000 tons of coal can be extracted from the mine. in the first year of operations, 25,000 tons of coal was extracted, and the coal is considered sold immediately upon extraction.\npittsburg resources would recognize ______.

lo 5 pittsburg resources acquired a coal mine for $6,000,000. the companys survey estimates that 120,000 tons of coal can be extracted from the mine. in the first year of operations, 25,000 tons of coal was extracted, and the coal is considered sold immediately upon extraction.\npittsburg resources would recognize ______.

Answer

Explanation:

Step1: Calculate depletion per ton

Depletion per ton = $\frac{\text{Cost of coal mine}}{\text{Estimated tons of coal}}$ = $\frac{6000000}{120000}$ = $50$ per ton

Step2: Calculate depletion expense for first - year

Depletion expense = Depletion per ton × Tons extracted in first year = $50\times25000$ = $1250000$

Answer:

depletion expense of $1,250,000$