Metals Exploration Corporation engages in the exploration and development of many types of natural resources. In the last two years, the company has engaged in the following activities:
Jan. 1, Year 1 Purchased a coal mine estimated to contain 300,000 tons of coal for $900,000.
July 1, Year 1 Purchased for $2,000,000 cash a tract of land containing timber estimated to yield 3,000,000 board feet of lumber. At the time of purchase, the land had an appraised value of $200,000.
Feb. 1, Year 2 Purchased a silver mine estimated to contain 50,000 tons of silver for $850,000.
Aug. 1, Year 2 Purchased for $875,000 oil reserves estimated to contain 270,000 barrels of oil, of which 20,000 would be unprofitable to pump.

Required
a. Determine the amount of depletion expense that would be recognized on the Year 1 income statement for each of the two reserves, assuming 80,000 tons of coal were mined, and 1,000,000 board feet of lumber were cut.
b. Determine the amount of depletion expense that would be recognized on the Year 2 income statement for each of the four reserves, assuming 68,000 tons of coal are mined, 1,200,000 board feet of lumber are cut, 9,000 tons of silver are mined, and 80,000 barrels of oil are extracted.
c. Prepare the portion of the December 31, Year 2, balance sheet that reports natural resources.