In February 2015,Gemstone Industries Purchased the Opal Mine at a Cost

question 56

Multiple Choice

In February 2015,Gemstone Industries purchased the Opal Mine at a cost of $20,000,000.The mine is estimated to contain 500,000 carats of stone and to have a residual value of $1,000,000 after mining operations are completed.During 2015,50,000 carats of stone were removed from the mine and sold.In this situation:

• A)The book value of the mine is $19,000,000 at the end of 2015.
• B)The amount of depletion deducted from revenue during 2015 is $1,900,000.
• C)The amount of depletion deducted from revenue during 2015 is $1,000,000.
• D)The mine is classified as an intangible asset and amortized over a period not to exceed 40 years.

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