a. What is LCM's cost depletion for years 1, 2, and 3? Year 1 Year 2 Year 3 Cost Depletion
a. What is LCM's cost depletion for years 1, 2, and 3? Year 1 Year 2 Year 3 Cost Depletion
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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M2
Transcribed Image Text:b. What Is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)?
Year 1
Year 2
Year 3
Percentage
Depletion
![Required Information
[The following information applies to the questions displayed below.]
Last Chance Mine (LCM) purchased a coal deposit for $2,485,700. It estimated It would extract 18,550 tons of coal from
the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.12 million, $6.5 million, and $4.5 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 ($12,900), $635,000, and $475,000, respectively. In years 1-3, LCM extracted 19,550 tons of coal as follows:
(1) Tons of
Coal
18,550
(2) Basis
$2,485,700
Year 1
Year 2
Year 3
Depletion
(2)/(1) Rate
$134.00
a. What is LCM's cost depletion for years 1, 2, and 3?
Year 1
3,500
Note: Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.
Cost Depletion
Tons Extracted per Year
Year 2
9,650
Year 3
6,400](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb9a81e89-2c71-430b-b2ab-d050d4f3187b%2F8e636c0b-deec-4e2a-b4a2-550575a4098f%2F1bka0yb_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required Information
[The following information applies to the questions displayed below.]
Last Chance Mine (LCM) purchased a coal deposit for $2,485,700. It estimated It would extract 18,550 tons of coal from
the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.12 million, $6.5 million, and $4.5 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 ($12,900), $635,000, and $475,000, respectively. In years 1-3, LCM extracted 19,550 tons of coal as follows:
(1) Tons of
Coal
18,550
(2) Basis
$2,485,700
Year 1
Year 2
Year 3
Depletion
(2)/(1) Rate
$134.00
a. What is LCM's cost depletion for years 1, 2, and 3?
Year 1
3,500
Note: Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.
Cost Depletion
Tons Extracted per Year
Year 2
9,650
Year 3
6,400
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