Chapter 18 Problem 18-11
2008 No depletion because there is no production.
2009 Purchase price 28,000,000
Estimated restoration cost 2,000,000
Development cost – 2008 1,000,000
Development cost – 2009 1,000,000
Total cost 32,000,000
Residual value ( 5,000,000)
Depletable cost 27,000,000
Rate in 2009 (27,000,000 / 10,000,000) 2.70
Depletion in 2009 (3,000,000 x 2.70) 8,100,000
2010 Tons extracted in 2010 3,500,000
Tons remaining in 12/31/2010 2,500,000
Total estimated output – 1/1/2010 6,000,000
New rate in 2010 (27,000,000 – 8,100,000/6,000,000) 3.15
Depletion in 2010 (3,500,000 x 3.15) 11,025,000
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