Santa Fe Purchased the Rights to Extract Turquoise on a Tract

question 68

Multiple Choice

Santa Fe purchased the rights to extract turquoise on a tract of land over a five-year period. Santa Fe paid $300,000 for extraction rights. A geologist estimates that Santa Fe will recover 5,000 pounds of turquoise. During the current year, Santa Fe extracted 1,500 pounds of turquoise, which it sold for $200,000. What is Santa Fe's cost depletion expense for the current year?

• A) $60,000
• B) $90,000
• C) $110,000
• D) $300,000
• E) None of these

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Problem Solving

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