Question: Brandon Oil Company recently purchased oil and natural gas reserves

Brandon Oil Company recently purchased oil and natural gas reserves in a remote part of Alaska for $1,850,000. Brandon spent $10,000,000 preparing the oil for extraction from the ground. Brandon estimates that 108,000,000 barrels of oil will be extracted from the ground. The land has a residual value of $20,000. During 2011, 15,000,000 barrels are extracted from the ground.

Required:
Calculate the amount of depletion taken in 2011.

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  • CreatedSeptember 22, 2015
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