The company expects to extract 11.1 million pounds of copper from the mine. Actu
ID: 2570293 • Letter: T
Question
The company expects to extract 11.1 million pounds of copper from the mine. Actual production was 2.7 million pounds in 2018 and 4.1 million pounds in 2019.
Required:
1. Compute depletion and depreciation on the mine and mining equipment for 2018 and 2019. The units-of-production method is used to calculate depreciation. (The expected format for rounding is presented in the appropriate rows of the table. Round your final answers to nearest whole dollar.)
I am looking for the depletion per pound and depletion expense in 2018 and 2019
I am also looking for depreciated per pound, pounds extraced, and depreciation expense for 2018 and 2019
Explanation / Answer
Solution:
Depletion is an accounting concept which is similar to depreciation but it is mostly used in mining and mineral oil extraction industries. The matching principle of accounting requires that amount of asset depleted in a given period must be expensed against the revenue in that period.
Depletion Expense = (Cost – Salvage Value) / Estimated Number of Units x Number of Units Extracted (Actual)
Cost and Salvage Value is not given in the question.
Please put cost and salvage value in the below formula you will get Depletion Expense Per Pound
Depletion Expense per pound = (Cost – Salvage Value) / Estimated Number of Units 11.1 million pounds
Depletion Expense for 2018 = Depletion Expense Per Pound x Actual Product in 2018 2.7 million pounds
Depletion Expense for 2019 = Depletion Expense Per Pound x Actual Product in 2019 4.1 million pounds
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