A company purchased mineral assets costing 889000 with estim

A company purchased mineral assets costing $889,000 with estimated residual value of $70,000 and holding approximately 260,000 tons of ore. During the first year, 53,000 tons are extracted and sold. What is the amount of depletion for the first year? (Round intermediary calculations to seven decimal places as needed, X.xxxxxXX and your final answer to the nearest whole dollar.) OA. $166,950 B. $181,219 O C. $151,850 D. Cannot be determined from the data given

Solution

Option A is correct.

Depletion = ($889000 - $70000 / 260000 tons) * 53000 Ton

= $166950