Compute the annual depletion on a cost basis

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Reference no: EM131810044

Eastern Gravel expects to produce 50,000 tons of gravel annually for 5 years. The deposit cost $120K to acquire. The annual gross revenues are expected to be $8 per ton, and the net revenues are expected to be $3 per ton.

(a) Compute the annual depletion on a cost basis.

(b) Compute the annual depletion on a percentage basis.

Reference no: EM131810044

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