A Company Acquires a Natural Resource for $1,200,000 and Spends

question 54

Multiple Choice

A company acquires a natural resource for $1,200,000 and spends another $520,000 on development of the site and $370,000 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 200,000 units over its expected life. In year 1, 10,000 units are extracted from the resource. What is the depletion expense for year 1? (Round any intermediary calculations to the nearest cent, and round your final answer to the nearest dollar.)

• A) $60,000
• B) $86,000
• C) $104,500
• D) $112,000

---

Definitions:

Proactive Interference

The phenomenon where older memories interfere with the recall of new information.

Serial-Order Effect

The tendency of a person to recall the first and last items in a series best, and the middle items worst.

Proactive Interference

A phenomenon where old information inhibits the ability to remember new information.

Alzheimer's Disease

A progressive neurological disorder that causes memory loss, cognitive decline, and ultimately, loss of ability to perform even simple tasks, due to brain cell degeneration.