Depletion Hidden Hollow Mining Co acquired mineral rights fo

Depletion Hidden Hollow Mining Co. acquired mineral rights for $50,750,000. The mineral deposit is estimated at 35,000,000 tons. During the current year, 10,150,000 tons were mined and sold. a. Determine the depletion rate. If required, round your answer to two decimal places. per ton b. Determine the amount of depletion expense for the current year c. Journalize the adjusting entry on December 31 to recognize the depletion expense Dec. 31

Solution

a. Depletion rate = $50,750,000 / 35,000,000 tons = $1.45 per ton

b. Amount of depletion expense for the current year = 10,150,000 tons × $1.45 per ton = $14,717,500

c.

Date	General Journal	Debit	Credit
Dec. 31	Depletion Expense	$14,717,500
	Accumulated Depletion		$14,717,500