In January, 20X7, Barton Iron Ore Purchased a Mineral Mine

question 125

Multiple Choice

In January, 20X7, Barton Iron Ore purchased a mineral mine for $5.1 million with removable ore estimated by geological surveys at 2 million tons. The property has an estimated value of $300,000 after the iron ore has been extracted. The company incurred $1.5 million of development costs preparing the mine for production. During 20X7, 400,000 tons were sold. What is the amount of depletion that Pratt should expense for 20X7?

• A) $1,200,000
• B) $1,320,000
• C) $1,020,000
• D) $960,000

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