The following are two independent scenarios:

1. On 1 March 20X9 Tunio Corp. purchased a copper mine on a land site for $3,500,000, and $1 million of the purchase price related to the land. At the time of purchase, an expert estimated 5 million tonnes of copper could be extracted. Tunio invested $500,000 in development costs before extraction began. The upfront mine site restoration costs were estimated to be $77,000 (discounted). During 20X9, 400,000 tonnes of copper was extracted.

2. Morano Inc. incurred $6 million in exploration and development costs for a mining site. Geologists estimate that the mining site will be able to produce 3 million tonnes of coal. Morano estimates that after completion of the mining, the land will likely be able to sell for $1 million and be repurposed. Mining began in 20X2 and 200,000 tonnes of coal were extracted that year.

Required:

1. For each scenario calculate:

. The depletion per tonne

. The total depletion for the first year of mining

2. How likely do you think it is for either Tunio Corp. or Morano Inc. to subsequently revise the total estimated amount to be extracted from the mines?

3. If Tunio Corp. or Morano Inc. revise the total estimated amounts to be extracted from the mines, how should this be handled for financial reporting purposes?

4. How might graphing the depletion amounts be useful for Tunio Corp. or Morano Inc.?