An oil company purchased 10,000 acres of land on January 1, 2011, for $5,000,000, on which...

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An oil company purchased 10,000 acres of land on January 1, 2011, for $5,000,000, on which it developed an underground oil site. The company spent $11,000,000 to prepare the site for operation but believes that 500,000 barrels of oil can be extracted from the site over five years after drilling begins. The land has a residual value of $250,000. Assuming 50,000 barrels of oil were extracted from the land in 2012, how much depletion would be recorded? An oil company purchased 10,000 acres of land on January 1, 2011, for $5,000,000, on which it developed an underground oil site. The company spent $11,000,000 to prepare the site for operation but believes that 500,000 barrels of oil can be extracted from the site over five years after drilling begins. The land has a residual value of $250,000. Assuming 50,000 barrels of oil were extracted from the land in 2012, how much depletion would be recorded?

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The depletion recorded in 2012 would be calculated as follows Dep... View the full answer