In 2007, Heslop Mining Company purchased property with natural resources for $5,400,000. The property was relatively close to a large city and had an expected residual value of $700,000. The following information relates to the use of the property:

(a) In 2007, Heslop spent $300,000 in development costs and $500,000 in buildings on the property. Heslop does not anticipate that the buildings will have any utility after the natural resources are depleted.

(b) In 2008 and 2010, $200,000 and $700,000, respectively, were spent for additional developments on the mine.

(c) The tonnage mined and estimated remaining tons for years 2007–2011 are as follows:

Instructions:
Compute the depletion and depreciation expense for the years2007–2011.

Transcribed Image Text:

Year Tons Extracted Estimated Tons Remaining 2007 2008 2009 2010 2011 1,200,000 1100,000 800,000 900,000 4,000.000 2,800.000 1 .800.000 900,000