Acompany purchased a mineral deposit for $800,000. it expects this property to produce 1,200,000 tons of ore and to have a salvage value of $50,000. in the current year, the company mined and sold 90,000 tons of ore. its depletion expense for the current period is equal to:

Depletion Expense for Current Year = 57,692

Explanation:

Cost Price of Mineral Deposit= $800,000

Salvage Value = $50,000

Useful life = Unknown

Expected to Produce = 1200,000 tons of ore

Currently mined and sold = 90,000 tons of ore

Depletion Expense for current year = ?

Expected to produce 1200,000 tons in number of years

Currently produced 90,000 tons

therefore =     1200,000

                          90,000

                 = 13 years to produce 1200,000 tons of ore

Therefore Depletion Expense for Current Year = 800,000-50,000

                                                                                       13 years

                                                                        = 750,000

                                                                              13

                                                                         = 57,692

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