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New value of the depletion unit with the cost method

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Reference no: EM132011917

A gas well in Manila has reserves of 2,000,000 mcf in the ground. The initial cost basis was $800,000, and during the first operation a depletion allowance of $280,000 was taken. At the beginning of the second year of operation, the reserves were reestimated to be 1,400,000 mcf. What is the new value of the depletion unit with the cost method?

Reference no: EM132011917

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