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What amount must be recognized as depletion

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Problem 1: On January 1, 2018, Kim Company purchased a land for $12,000,000. The company expected to extract 2,000,000 tons of mine from this land over the next 20 years at which time, the residual value of the asset shall be 0. During 2018 and 2019 operations, 60,000 tons were mined each year and sold for $80 per ton. The estimate of the remaining lifetime capacity of the mine was raised to 2,400,000 tons at the start of 2020 and the residual value was to be $960,000. What amount must be recognized as depletion in 2020 if the total production for 2020 is 100,000 tons?

Reference no: EM132888859

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