Narda Company purchased land containing an estimate 4,000,000 tons of ore for $16,000,000. The land will be
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Narda Company purchased land containing an estimate 4,000,000 tons of ore for $16,000,000. The land will be worth $2,400,000 without the ore after 8 years of active mining. Although the equipment needed for the mining will have a useful life of 20 years, it is not expected to be usable and will have no value after the mining on this site is complete. Compute the depletion charge per ton and the amount of depletion expense for the first year of operation, assuming that 600,000 tons of ore are mined and sold. Also, compute the first-years depreciation on the mining equipment using the production method, assuming a cost of $19,200,000 with no residual value.
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Depletion charge per ton 16000000 2400000 4...View the full answer
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