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Jonson Corporation incurred $150,000 in capitalized acquisition costs to develop an oil well. The corporation's geologists estimated that there were 200,000 barrels of oil in the well at the beginning of the year. Jonson produced and sold 20,000 barrels this year, earning $140,000 of gross revenue. Its operating expenses for the well totaled $25,000. Required: Calculate Jonson's allowable depletion deduction.

Jonson Corporation incurred $150,000 in capitalized acquisition costs to develop an oil well. The corporation's geologists estimated that there were 200,000 barrels of oil in the well at the beginning of the year. Jonson produced and sold 20,000 barrels this year, earning $140,000 of gross revenue. Its operating expenses for the well totaled $25,000. Required: Calculate Jonson's allowable depletion deduction.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Jonson Corporation incurred $150,000 in capitalized acquisition costs to develop an oil well. The corporation's geologists estimated that there were 200,000 barrels of oil in the well at the beginning of the year. Jonson produced and sold 20,000 barrels this year, earning $140,000 of gross revenue. Its operating expenses for the well totaled $25,000. Required: Calculate Jonson's allowable depletion deduction.
Transcribed Image Text:Jonson Corporation incurred $150,000 in capitalized acquisition costs to develop an oil well. The corporation's geologists estimated that there were 200,000 barrels of oil in the well at the beginning of the year. Jonson produced and sold 20,000 barrels this year, earning $140,000 of gross revenue. Its operating expenses for the well totaled $25,000. Required: Calculate Jonson's allowable depletion deduction.
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