Charles Purchases an Interest in a Uranium Mine for $2,500,000

question 5

Multiple Choice

Charles purchases an interest in a uranium mine for $2,500,000 on June 7, 2014. Recoverable tonnage is estimated at 500,000. During 2014, 25,000 tons are mined and sold for $800,000. Charles incurs $500,000 of expenses during 2014. The percentage depletion rate for uranium is 22%. What is the depletion deduction for 2014?

• A) $125,000
• B) $150,000
• C) $176,000
• D) $200,000
• E) $250,000

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Definitions:

Continuous Improvement

An ongoing effort to improve products, services, or processes by making incremental improvements over time or breakthrough improvements all at once.

Process Perspective

An approach to management that focuses on the optimization and improvement of business processes to achieve better performance and outcomes.

Budgeted Costs

Projected expenses for a specified period under budgetary control, guiding spending and financial planning.

Fixed Costs

Costs that do not vary with the level of production or sales over a certain period, such as rent, salaries, and insurance.