Mont Mining Co. purchased for 10,630,400 a mine that is estimated to have 48,320,000 tons of...

Mont Mining Co. purchased for 10,630,400 a mine that is estimated to have 48,320,000 tons of ore and no salvage value. In the first year, 6,440,000 tons of ore are extracted.

show how this mine is reported on the balance sheet at the end of the year

Solutions

Expert Solution

Balancesheet:
Mine		$ 1,06,30,400
Depletion expense		$ -14,16,800	$ 92,13,600

Workings:
Depletion Cost per unit	=	(Cost of the asset - Resale value) / Estimated number of units
	=	($10630400 - $0) / 48320000
	=	$ 0.22


Depletion expense (First year)	=	Depletion Cost per unit X Number of units extracted
	=	$ 0.22 X 6440000 tons
	=	$ 14,16,800

ekkarill92 answered 1 year ago

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