B$.$ Composite depreciation.

Callon Co$.$ uses the composite method to depreciate its equipment. The following totals are for all of the equipment in the group:

Initial Residual Depreciable Depreciation

Cost Value Cost Per Year

$$1,000,000$ $$100,000$ $$900,000$ $$90,000$

Instructions

$($a$)$ What is the composite rate of depreciation? $($To the nearest tenth of a percent.$)$

$($b$)$ A machine with a cost of $$25,000$ was sold for $$15,000$ at the end of the third year. What entry should be made?

C$.$ Depletion allowance.

Mareos Company purchased for $$3,800,000$ a mine estimated to contain $2\mathrm{.}5$ million tons of ore. When the ore is completely extracted, it was expected that the land would be worth $$200,000.$ A building and equipment costing $$1,800,000$ were constructed on the mine site, and they will be completely used up and have no salvage value when the ore is exhausted. During the first year, $750,000$ tons of ore were mined, and $$300,000$ was spent for labor and other operating costs.

Instructions

Compute the total cost per ton of ore mined in the first year. $($Show computations by setting up a schedule giving cost per ton.$)$