What total amount would be charged to depletion of the mine and depreciation of the mining equipment and structures for 2021, assuming that Phillip uses the units-of-production method for both depletion and depreciation? (Round your final calculations to the nearest whole thousand dollars.) A. $2,601,000. B. $2,520,000. C. $2,610,000. D. $2,565,000.
What total amount would be charged to depletion of the mine and depreciation of the mining equipment and structures for 2021, assuming that Phillip uses the units-of-production method for both depletion and depreciation? (Round your final calculations to the nearest whole thousand dollars.) A. $2,601,000. B. $2,520,000. C. $2,610,000. D. $2,565,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On April 23, 2021, Phillip Mining entered into an agreement with the state of California to obtain the rights to operate a mineral mine in California for $12 million. Additional costs and purchases included the following:
Preparation of site for excavation $ 4,800,000
Mining equipment 360,000
Construction of various structures on site 240,000
8After the minerals are removed from the mine, the equipment will be sold for an estimated residual value of $60,000. The structures will be torn down. The mine is expected to produce 1,400,000 tons of ore. After the ore is removed, the land will revert back to the state of California. During 2021, Philips extracted 210,000 tons of ore from the mine. What total amount would be charged to depletion of the mine and depreciation of the mining equipment and structures for 2021, assuming that Phillip uses the units-of-production method for both depletion and depreciation? (Round your final calculations to the nearest whole thousand dollars.)
A. $2,601,000.
B. $2,520,000.
C. $2,610,000.
D. $2,565,000.
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