Determine the depletion allowance for each year

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Reference no: EM132167181

Question: A 2000-acre tract of timber is purchased by the Newhouse Paper Company for $800,000. The acquisitions department at Newhouse estimates the land will be worth $225 per acre once the timber is cleared. The materials department estimates that a total of 5 million board-feet of timber is available from the tract. It is expected to take 5 years for all the timber to be harvested. The harvest schedule calls for equal amounts of the timber to be harvested each year. Determine the depletion allowance for each of the 5 years.

Reference no: EM132167181

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