Question

Question 10 View Policies Show Attempt History Current Attempt in Progress At the beginning of 2020, Sheridan Company acquired a mine for $691,000. Of this amount, $103,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 11,490,000 units of ore appear to be in the mine. Sheridan incurred $175,100 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $41,200. During 2020, 2,328,000 units of ore were extracted and 2,115,000 of these units were sold. Compute the following. * Your answer is incorrect. The total amount of depletion for 2020. (Round per unit answer to 2 decimal places, eg. 0.45 for computational purpose and final answer to 0 decimal places, eg. 45,892.) Depletion for 2020 $ e Textbook and Media Your answer is incorrect. The amount that is charged as an expense for 2020 for the cost of the minerals sold during 2020.(Round per unit answer to 2 decimal places, e.g. 0.45 for computational purpose and final answer to O decimal places, eg. 45,892.) Amount that is charged as an expense for 2020 $ e Textbook and Media

Answer 1

Answer
Depletion cost per unit = (Cost of mine acquired-Land value+Development costs+Fair value of obligation)/Expected units
(691000-103000+175100+41200)/11490000=0.07
0.07
a
						Amount of Depletion for 2020 = 2328000*0.07=				$     1,62,960
b
						Amount charged as an expense = 2115000*0.07=				$     1,48,050