In 2009, 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 2009, 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 2010 and 2012, $200,000 and $700,000, respectively, were spent for additional developments on the mine.
(c) The tonnage mined and estimated remaining tons for years 2009-2013 are as follows:
Year _________________Tons Extracted____________ Estimated Tons Remaining
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 ..................................... 4,000,000
2010 . . . . . . . . . . . . . . . . . . . . . 1,200,000 ..................................... 2,800,000
2011 . . . . . . . . . . . . . . . . . . . . . 1,100,000 ..................................... 1,800,000
2012 . . . . . . . . . . . . . . . . . . . . . . 800,000 ........................................ 900,000
2013 . . . . . . . . . . . . . . . . . . . . . . 900,000 ................................................ 0
Instructions:
Compute the depletion and depreciation expense for the years 2009-2013.