Calculate depletion. (LO 2)

On January 1, 2008, American Oil Company purchased the rights to an offshore oil well for \(\$ 45,000,000\). The company expects the oil well to produce \(9,000,000\) barrels of oil during its life. During 2008, American Oil removed 315,000 barrels of oil.

a. How much depletion should American Oil Company record for 2008?

b. What is the book value of the oil rights at December 31,2008 , the end of the fiscal year?