707'7s
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Last Chance Mine (LCM) purchased a coal deposit for $2,282,400. It estimated it
would extract 15,850 tons of coal from the deposit. LCM mined the coal and
sold it, reporting gross receipts of $1.21 million, $51 million, and $4.3 million for
years 1 through 3, respectively. During years 1–3, LCM reported net income
(loss) from the coal deposit activity in the amount of ($16,500), $730,000, and
$527,500, respectively. In years 1–3, LCM extracted 16,850 tons of coal as
follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in
dollars and not in millions of dollars.)
(1) Tons of
Coal
Year 1
(2) Basis
Depletion (2)/(1) Tons Extracted per
Rate
Year 3
Year
Year 2
15,850
$2,282,400 $144.00
4,150
7,300 5,400
c. Using the cost and percentage depletion computations from parts (a) and (b),
what is LCM's actual depletion expense for each year?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa7ebd3dc-80e3-4b15-a64f-280f53331561%2Fef404a72-80e5-4edf-84ee-e1ab5bd04c88%2Fxmjxwc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Last Chance Mine (LCM) purchased a coal deposit for $2,282,400. It estimated it
would extract 15,850 tons of coal from the deposit. LCM mined the coal and
sold it, reporting gross receipts of $1.21 million, $51 million, and $4.3 million for
years 1 through 3, respectively. During years 1–3, LCM reported net income
(loss) from the coal deposit activity in the amount of ($16,500), $730,000, and
$527,500, respectively. In years 1–3, LCM extracted 16,850 tons of coal as
follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in
dollars and not in millions of dollars.)
(1) Tons of
Coal
Year 1
(2) Basis
Depletion (2)/(1) Tons Extracted per
Rate
Year 3
Year
Year 2
15,850
$2,282,400 $144.00
4,150
7,300 5,400
c. Using the cost and percentage depletion computations from parts (a) and (b),
what is LCM's actual depletion expense for each year?
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