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Calculate the depletion

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Question - On April 17, 2021, the Loadstone Mining Company purchased the rights to a coal mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the coal totaled $5,640,000. The company expects to extract 940,000 tons of coal during a four-year period. During 2021, 244,000 tons were extracted and sold immediately.

Required -

1. Calculate depletion for 2021.

2. Is depletion considered part of the product cost and included in the cost of inventory?

Reference no: EM133127437

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