What total amount would be charged to depletion

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Reference no: EM133328362

Question: On Pril 23, 2018, Estra Mining entered into an agreement with the state of California to obtain the rights to operate a mineral mine for $12M. Additional costs and purchases included the following:

Prep of site for excavation $4,800,000

Mining Equipment 360,000

Construction of various structures on site $240,000

After the minerals are removed from the mine, the equipment will be sold for an estimated residual value of $60,000. The structures will be torn down. The mine is expected to produce 1,400,000 tons of ore. After the ore is removed, the land will revert back to the state of California. During 2018, Estra extracted 210,000 tons of ore from the mine.

What total amount would be charged to depletion of the mine and depreciation of the mining equipment and structures for 2018, assuming that Estra uses the units of production methos for both depletion and depreciation?

Reference no: EM133328362

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