A gold mine with an estimated deposit of 300,000 ounces of gold has a basis of $30 million (cost minus land value). The mine has a gross income of $16,425,000 for the year from selling 45,000 ounces of gold (at a unit price of $365 per ounce). Mining expenses before depletion equal $12,250,000. Compute the percentage depletion allowance. Would it be advantageous to apply cost depletion rather than percentage depletion?

A gold mine with an estimated deposit of 300,000 ounces of gold has a basis of $30 million (cost minus land value). The mine has a gross income of $16,425,000 for the year from selling 45,000 ounces of gold (at a unit price of $365 per ounce). Mining expenses before depletion equal $12,250,000. Compute the percentage depletion allowance. Would it be advantageous to apply cost depletion rather than percentage depletion?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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