It was projected that a coal mine purchased 3 years ago for $7 million would hold 4,000,000 tons of coal. The volume of coal extracted has been 21,000, 18,000, and 20,000 tons, respectively, over the past 3 years. For the first year, the gross profits earned in those three years was $257,000, for the second year, $320,000, and for the third year, $340,000. Determine (a) each year's expense depletion allowance and (b) the percentage of the purchase price depleted to date.
It was projected that a coal mine purchased 3 years ago for $7 million would hold 4,000,000 tons of coal. The volume of coal extracted has been 21,000, 18,000, and 20,000 tons, respectively, over the past 3 years. For the first year, the gross profits earned in those three years was $257,000, for the second year, $320,000, and for the third year, $340,000. Determine (a) each year's expense depletion allowance and (b) the percentage of the purchase price depleted to date.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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It was projected that a coal mine purchased 3 years ago for $7 million would hold 4,000,000 tons of coal. The volume of coal extracted has been 21,000, 18,000, and 20,000 tons, respectively, over the past 3 years. For the first year, the gross profits earned in those three years was $257,000, for the second year, $320,000, and for the third year, $340,000. Determine (a) each year's expense depletion allowance and (b) the percentage of the purchase price depleted to date.
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