Pittsburg Resources acquired a coal mine for $6,000,000. The company’s survey estimates that 120,000 tons of coal can be extracted from the mine. In the first year of operations, 25,000 tons of coal was extracted, and the coal is considered sold immediately upon extraction.

Required:

1. Calculate depletion for the first year.

2. Discuss the accounting treatment of the depletion calculated in requirement 1.

The answer is given below;

Explanation:

1.$6,000,000/120,000=$50*25,000=$1,250,000

2.this method is called units of digits method for depletion.

The accounting treatment shall be;

Depletion Expense    Dr.$1,250,000

Accumulated Depletion  Cr.$1,250,000

When the asset will retire, the accumulated depletion will be eliminated with corresponding effect to mine                        

1   all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

to settle or decide by choice of alternatives or possiblities

4 i really dont know

answer; the above statement/question is ( true);