What should be the charge to depletion expense per ton

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Reference no: EM131959438

Problem

Porter Resources Company acquired a tract of land containing an extractable natural resource. Porter is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2,500,000 tons, and that the land will have a value of $1,000,000 after restoration. Relevant cost information follows:

Land $7,500,000
Estimated restoration costs 1,500,000

If Porter maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?

Reference no: EM131959438

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