Calculating Units

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

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
   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 
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

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...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online