Calculating Units

Calculating Units - and then sells 100,000 ounces of gold...

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   Calculating Units-of-Activity Depletion Suppose a company pays $50,000,000 for an existing gold mine estimated to contain 1,000,000  ounces of gold. The mine has no salvage value, so the depletable cost of $50,000,000 is divided by  1,000,000 ounces to calculate a per-unit depletion cost of $50 per ounce. If the company extracts 
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Unformatted text preview: and then sells 100,000 ounces of gold during the year, depletion expense equals $5,000,000. Calculating Units-of-Activity Depletion One way to record depletion expense of $5,000,000 is to debit depletion expense for $5,000,000 and credit accumulated depletionmine for $5,000,000...
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