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Depletion Expense In 2004 Heslop Mining Company purchased property with natural resources for $5,400,000 The property was relatively close to a large city and had an expected residual value of

Depletion Expense

In 2004,Heslop Mining Company purchased property with natural resources for $5,400,000. The property was relatively close to a large city and had an expected residual value of $700,000.

The following information relates to the use of the property:

(a) In 2004,Heslop spent $300,000 in development costs and $500,000 in buildings on the property. Heslop does not anticipate that the buildings will have any utility after the natural resources are depleted.

(b) In 2005 and 2007,$200,000 and $700,000,respectively,were spent for additional developments on the mine.

(c) The tonnage mined and estimated remaining tons for years 2004–2008 are as follows:

Year

Tons Extracted

Estimated Tons Remaining

2004                   

                0

4,000,000

2005                   

                1,200,000

2,800,000

2006                   

                1,100,000

1,800,000

2007                   

                800,000

900,000

2008                   

                900,000

0

Instructions: Compute the depletion and depreciation expense for the years 2004–

2008.

Jun 17 2020 View more View Less

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