What should be the charge to depletion expense


Crowder Company acquired a tract of land containing an extractable natural resource. Crowder is required by the purchase contract 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 5,000,000 tons, and that the land will have a value of $1,000,000 after restoration. Relevant cost information follows:

Land $9,000,000
Estimated restoration costs 1,500,000

If Crowder maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?

 

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Accounting Basics: What should be the charge to depletion expense
Reference No:- TGS053453

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