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Arizona Mining Company | ||
Calculation of depletion expense | Amount $ | Note |
Cost of land | 1,800,000.00 | A |
Less: Residual Value | 100,000.00 | B |
Depreciable Value | 1,700,000.00 | C=A-B |
Estimated ore available | 2,000,000.00 | D |
Depletion cost per ton | 0.85 | E=C/D |
Tonnage in 1st Year | 200,000.00 | F |
Depletion Expense in 1st Year | 170,000.00 | G=E*F |
Value of land remaining at the end of 1st Year | 1,630,000.00 | H=A-G |
Tonnage in 2nd Year | 400,000.00 | I |
Depletion Expense in 2nd Year | 340,000.00 | J=I*E |
Value of land remaining at the end of 2nd Year | 1,290,000.00 | K=H-J |
Add: Development costs | 1,460,000.00 | L |
Revised cost of land | 2,750,000.00 | M=K+L |
Less: Residual Value | 100,000.00 | See B |
Depreciable Value | 2,650,000.00 | N=M-B |
Estimated ore available | 2,500,000.00 | O |
Depletion cost per ton | 1.06 | P=N/O |
Tonnage in 3rd Year | 510,000.00 | Q |
Depletion Expense in 3rd Year | 540,600.00 | R=P*Q |
Calculation of cost of goods sold | |||||||||
Year | Tonnage | Cost per ton | Amount | Quantity sold | Cost per ton | Cost of Goods sold | Balance Quantity | Cost per ton | Balance $ |
1st | 200,000.00 | 0.85 | 170,000.00 | 160,000.00 | 0.85 | 136,000.00 | 40,000.00 | 0.85 | 34,000.00 |
2nd | 400,000.00 | 0.85 | 340,000.00 | 410,000.00 | 0.85 | 348,500.00 | 30,000.00 | 0.85 | 25,500.00 |
3rd | 510,000.00 | 1.06 | 540,600.00 | 30,000.00 | 0.85 | 25,500.00 | 90,000.00 | 1.06 | 95,400.00 |
420,000.00 | 1.06 | 445,200.00 | |||||||
450,000.00 | 470,700.00 |
Final Answer | |||
Year | Depletion Expense | Note | Cost of goods sold |
1st | 200,000.00 | See F | 136,000.00 |
2nd | 340,000.00 | See J | 348,500.00 |
3rd | 540,600.00 | See R | 470,700.00 |
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