A Company Acquires a Natural Resource for $1,400,000 and Spends

question 45

Multiple Choice

A company acquires a natural resource for $1,400,000 and spends another $530,000 on development of the site and $320,000 for a nonmovable tangible asset installed at the site and $150,000 for tangible movable equipment. Both assets have an expected useful life of 10 years. The natural resource is expected to yield 140,000 units over its expected life. In year 1, 45,000 units are extracted from the resource. What depletion rate will be used? (Round your final answer to the nearest cent.)

• A) $10.00 per unit
• B) $13.79 per unit
• C) $16.07 per unit
• D) $17.14 per unit

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Definitions:

True Value

The actual, factual value or correctness of something, often used in the context of measurement, logic, or philosophy.

Unreliable

Lacking consistency or predictability; not able to be trusted to do or provide what is needed or expected.

Median

The median is the central number in a dataset that splits it into two halves of equal size.

Average

A numerical value expressing the central or typical value in a set of data, calculated as the sum of the values divided by the number of values.