Depreciation according to straight line method = (cost of asset - salvage value)/no of years
depreciation under slim would be same for 2020,2021,2022
depreciation = (258750 - 10350)/15 = 16560 each year
Depletion expenses is expenses for use of natural resources according to units extracted out of it. It will include other maintainence expenses on it.it is given that roads are used for logging and will be included under depletion expense hence,we will include it.
depletion expenses =( cost of land + expenses )/ no of estimated units x no of. Units produced
depletion expenses = cost of land = 11500 acres x 1955/acre = 22482500 + cost of road (287500) =22770000
estimated board feet available =7762500
depletion expenses per board feet = 22770000/7762500 = 2.93333
Board feet cut in year 2020 = 621000
depetion expenses for 2020 = 621000 x 2.93333 = 1821598
Annual cost will not be included in depletion expenses
so for 2021 depletion expenses is 22770000/7417500 x 890100 = 2732400
for 2022 = 22770000/7475000 x 747500 = 2277000
In reference to the previous answer, the depreciation for the first year would be different than the subsequent years as the asset was purchased mid-year (in March).
You would add the cost of replanting when calculating the depletion base each year as well.
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