Chapter 11, Problem 6PB

Underwood’s Miners recently purchased the rights to a diamond mine. It is estimated that there are two million tons of ore within the mine. Underwood’s paid $46,000,000 for the rights and expects to harvest the ore over the next fifteen years. The following is the expected extraction for the next five years.

• Year 1: 50,000 tons

• Year 2: 900,000 tons

• Year 3: 400,000 tons

• Year 4: 210,000 tons

• Year 5: 150,000 tons

Calculate the depletion expense for the next five years and create the journal entry for year one.