When Calculating Depletion, What Is the Proper Treatment of Residual

question 161

Multiple Choice

When calculating depletion, what is the proper treatment of residual value?

• A)There is no residual value in the calculation of depletion expense.
• B)The residual value is subtracted from cost to determine the depletable base.
• C)The residual value is added to cost to determine the depletable base.
• D)Residual value is ignored until the end of the asset's life at which time it is used to limit the final year's expense amount.

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Definitions:

Renal Column

Extensions of cortical tissue that project into the medulla of the kidney, separating the renal pyramids.

Renal Pyramids

Cone-shaped tissues of the kidney that contain the nephrons, the functional units that filter blood to produce urine.

Hilum

A crevice or gap that serves as the entry point for structures like nerves and blood vessels into an organ.

Inventory Costs

Expenses associated with storing and managing goods that a company holds in stock.