Asked by Jacob Matthews on Apr 28, 2024
Verified
On January 1 2017 Petersen Enterprises purchased natural resources for $1800000. The company expects the resources to produce 12000000 units of product. (1) What is the depletion cost per unit? (2) If the company mined and sold 20000 units in January what is depletion expense for the month?
Natural Resources
Assets that are found in nature and are used for economic gain, such as oil, forests, minerals, or water.
Depletion Expense
An accounting approach for allocating the cost of extracting natural resources from the earth over the period of their extraction.
- Elucidate and compute the exhaustion of natural resources.
Verified Answer
CO
Chris OrtizApr 30, 2024
Final Answer :
(1) Depletion cost per unit: $1800000 ÷ 12000000 units = $.15 per unit
(2) Depletion expense for January: $.15 × 20000 = $3000
(2) Depletion expense for January: $.15 × 20000 = $3000
Learning Objectives
- Elucidate and compute the exhaustion of natural resources.