Zvinakis Mining Company Paid $200,000 for the Rights to Mine

question 91

Essay

Zvinakis Mining Company paid $200,000 for the rights to mine lead in southeast Missouri. The cost to drill and erect a mine shaft was $2,400,000, and equipment to process the lead ore before shipment to the smelter was $1,800,000. The mine is expected to yield 2,000,000 tons of ore during the five years it is expected to be operating. The equipment has an estimated residual value of $150,000 when mining is concluded. The mine started operations on April 30, 2013. In 2013, 300,000 tons of ore were extracted, and in 2014, 700,000 tons were mined.
Required:
1. Compute the depletion rate and the units-of-production depreciation rate.
2. Compute depletion and depreciation for 2013 and 2014.

---

Definitions:

Scientific Theory

Hypothesis that has not been falsified after many years of rigorous testing, and is useful for making predictions about a wide range of phenomena.

Population Over Generations

Describes the changes in the size, genetic composition, or characteristics of a population across multiple generations.

Decomposers

Organisms, such as bacteria, fungi, and certain insects, that break down dead or decaying organisms, turning organic matter into simpler substances.

Dead Consumers

Organisms that have consumed other organisms during their lifetime and have since died, playing a role in nutrient cycling as they decompose.