Levi Company purchased land on February 1, 2014, at a cost of $5,000,000. It estimated that a total of 50,000 tons of ore is available for mining. After it has removed the ore, the company will be required by law to restore the property to its previous state. It estimates the fair value of this restoration obligation at $400,000. It believes it will be able to sell the property afterwards for $800,000. It incurred developmental costs of $1,000,000 before it was able to do any mining. In 2014 resources removed totaled 30,000 tons. The company sold 22,000 tons.
Instructions
Compute the following information for 2014. (Round to two decimals.)
(a) The total amount of depletion for 2014.
(b) The amount that is changed as an expens