Cuono Mining Co. purchased a mine for $6.5 million that is estimated to have 25 million tonnes of ore and a residual value of $500,000. In the first year, 5 million tonnes of ore are extracted and 3 million tonnes are sold.
(a) Record the depreciation and the cost of the ore extracted for the first year, ended August 31, 2014.
(b) Show how the mine and the ore on hand are reported on the balance sheet on August 31, 2014.