In January 20X1, Vorst Company purchased a mineral mine for $2,640,000. Removable ore was estimated at 1,200,000
Question:
In January 20X1, Vorst Company purchased a mineral mine for $2,640,000. Removable ore was estimated at 1,200,000 tons. After it has extracted all the ore, Vorst will be required by law to restore the land to its original condition. The expected present value of this obligation is $180,000. Vorst believes it will be able to sell the property after restoration for $300,000. During 20X1, Vorst incurred $360,000 of development costs to prepare the mine for production, and it removed and sold 60,000 tons of ore.
Required:
In its 20X1 income statement, what amount should Vorst report as depletion expense?
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Related Book For 
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer
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