Waterway Company has a mining operation in Alaska and has spent $244,000 for mineral rights, surveys, and excavation costs. The company engineers estimate that the mine containing the placer stream will produce a total of 1,000 tons of the metal. Assume in the first year that the company earned $520,000 in gross revenue and incurred $190,000 in operating expenses, and in the second year, the company earned $310,000 in gross revenue and incurred $170,000 in operating expenses. What is the company's maximum depletion deduction in Years 1 and 2 if the company extracted and sold 320 tons in the first year and 190 tons in the second year? Year 1 $ tA Year 2 tA $ Deduction 78080 46360
Waterway Company has a mining operation in Alaska and has spent $244,000 for mineral rights, surveys, and excavation costs. The company engineers estimate that the mine containing the placer stream will produce a total of 1,000 tons of the metal. Assume in the first year that the company earned $520,000 in gross revenue and incurred $190,000 in operating expenses, and in the second year, the company earned $310,000 in gross revenue and incurred $170,000 in operating expenses. What is the company's maximum depletion deduction in Years 1 and 2 if the company extracted and sold 320 tons in the first year and 190 tons in the second year? Year 1 $ tA Year 2 tA $ Deduction 78080 46360
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Waterway Company has a mining operation in Alaska and has spent $244,000 for
mineral rights, surveys, and excavation costs. The company engineers estimate that the
mine containing the placer stream will produce a total of 1,000 tons of the metal.
Assume in the first year that the company earned $520,000 in gross revenue and
incurred $190,000 in operating expenses, and in the second year, the company earned
$310,000 in gross revenue and incurred $170,000 in operating expenses. What is the
company's maximum depletion deduction in Years 1 and 2 if the company extracted
and sold 320 tons in the first year and 190 tons in the second year?
Year 1
Year 2
tA
$
tA
$
Deduction
78080
46360
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