Last Chance Mine (LC) purchased a coal deposit for $2,465,000. It was estimated it would extract 17,000
Question:
Last Chance Mine (LC) purchased a coal deposit for $2,465,000. It was estimated it would extract 17,000 tons of coal from the deposit. LC mined the coal and sold it, reporting gross receipts of $1.43 million, $5.45 million, and $3.5 million for years 1 through 3, respectively. During years 1–3, LC reported net income (loss) from the coal deposit activity in the amount of ($17,800), $625,000, and $560,000, respectively. In years 1–3, LC actually extracted 18,000 tons of coal as follows:
(1) (2) Depletion (2)/(1) Tons Extracted per Year
Tons of Coal Basis Rate Year 1 Year 2 Year 3
17,000 $2,465,000 $145.00 4,400 9,450 4,150
b. | What is Last Chance's percentage depletion for each year (the applicable percentage for coal is 10 percent)?
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Taxation Of Individuals And Business Entities 2015
ISBN: 9780077862367
6th Edition
Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver