Roan Corp Acquired a Tract of Land Containing an Extractable Natural

question 60

Multiple Choice

Roan Corp. acquired a tract of land containing an extractable natural resource. The company is required by the government to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 6.2 million tonnes, and that the land will have a value of $1.2 million after restoration. Relevant cost information follows: Land.............................................. $\$ 8,000,000$
Estimated retoration costs.............. $2,100,000$ If Roan maintains no inventories, what is the depletion charge per tonne of extracted resource?

• A) $1.00
• B) $1.32
• C) $1.44
• D) $1.63