Question

Question 9 (1 point) Cuono Mining Co. purchased a mine for $7.5 million that is estimated to have 20 million tonnes of ore and a residual value of $900,000. In the first year, 5 million tonnes of ore are extracted and 3 million tonnes are sold. Record annual depletion for the first year, ended August 31, 2017 Your Answer: Answer Question 10 (1 point) Pandora Pants Company acquires a delivery truck on April 6, 2017, at a cost of $28,000. The truck is expected to have a residual value of $11,000 at the end of its four-year life. The company has a policy of recording a half-year's depreciation in the year of acquisition and a half-year's depreciation in the year of disposal. Using the double diminishing-balance method, calculate the depreciation expense for the second year of the equipment's life. Enter your answer as a whole number without commas or dollar signs. Your Answer: Answer

Answer 1

Depletion Expense =		[(Cost - Salvage Value) / Estimated no. of units] x No. of units extracted
	=	[($ 7500000 - $ 900000) / $ 20000000] x 5000000
	=	$ 1,650,000.00

Cost of the truck			$ 28,000.00
Useful Life			4	years
Depreciation Rate			(100% / 4) x 2
		=	50%
Depreciation for year 1			$ 28000 x 50% x 1/2
		=	$    7,000.00
Depreciation for year 2			($ 28000 - $ 7000) x 50%
		=	$ 10,500.00