Calculating Depletion, Depreciation, and Ending Inventory

Atlas Company purchased the rights to a copper mine for $5,400,000 on January 1. The mine is expected to provide 1,260,000 tons of copper. Atlas also purchased equipment on June 30 for $108,000 (residual value $9,000) that will be used for this mine and other projects. The equipments estimated useful life is 6 years. During the year, the company extracted 90,000 tons of copper and sold 54,000 tons.

a. Calculate depletion for the year.

	Numerator	/	Denominator	=	Result
Annual depletion rate:	Answer	/	Answer	=

Note: Use the Result from above EXACTLY as shown in your calculation below. Annual depletion: $Answer b. Calculate depreciation expense for the year assuming the company uses straight-line depreciation. Note: Round your final answer to the nearest dollar. Depreciation expense: $Answer c. Determine ending inventory of copper for this year. Ending inventory: $Answer