A coal company invests $12 million in a mine estimated to have 20 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1,000,000 tons of coal are extracted and sold. 1) What is the depletion expense for the first year, 2) show calculations of how you calculated cost per ton mined?

A coal company invests $12 million in a mine estimated to have 20 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1,000,000 tons of coal are extracted and sold. 1) What is the depletion expense for the first year, 2) show calculations of how you calculated cost per ton mined?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

A coal company invests $12 million in a mine
estimated to have 20 million tons of coal and
no salvage value. It is expected that the mine
will be in operation for 5 years. In the first
year, 1,000,000 tons of coal are extracted and
sold.
1) What is the depletion expense for the first
year,
2) show calculations of how you calculated
cost per ton mined?

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