Reference no: EM132540114

Question - On January 1, 2018, Dayton Mining Company purchased land containing an estimated 15 million tons of iron ore at a cost of $6,000,000. The land without the iron ore is estimated to be worth $600,000. The company expects to operate the mine for 10 years. Buildings costing $550,000 are constructed on the site and are expected to last for 25 years. Equipment costing $350,000 with an estimated life of 12 years is installed. When the mine is closed, the buildings and the equipment possess residual value of $50,000 and $30,000 respectively. Straight-line method is used for depreciation of buildings, and double-declining method for depreciation of equipment. An estimated life of 10 years is adopted for both items. During the first two year of operations, Dayton extracted and sold 2 million tons of ore in each year.

Required - Determine the depreciation or depletion expenses for land, buildings, equipment and iron ore mine in 2018 and 2019.