Cannon Mountain Mining paid \($488,500\) for the right to extract mineral assets from a 400,000-ton deposit. In addition to the purchase price, Cannon also paid a \($500\) filing fee, a \($1,000\) license fee to the state of Nevada, and \($90,000\) for a geological survey of the property. Because Cannon purchased the rights to the minerals only, it expects the asset to have zero residual value. During the first year, Cannon removed 20,000 tons of the minerals.
Requirement
1. Make journal entries to record (a) purchase of the minerals (debit Mineral Asset), (b) payment of fees and other costs, and (c) depletion for the first year.