Concept explainers
Depletion of Natural resources:
Depletion of natural resources means the natural resources have been extracted for the business purposes. Sometimes, the business purchased the natural resource mines having limited quantity of resources for the fixed amount. In such cases, the amount paid (less amount realized after complete extraction of natural resources) must be the cost of total natural resources available. Therefore, the depletion rate per quantity of natural resources shall be computed and the resources extracted in each period shall be multiplied by depletion rate to arrive at the depletion expense of the respective period. This method is referred as
Requirement1:
The method for charging depletion for natural resources.
Requirement2:
The
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