Howton Paper Company purchased $1,200,000 of timberland in 2008 for its paper operations. Howton estimates that there are 10,000 acres of timberland and it cut 2,000 acres in 2009. The land is expected to have a residual value of $200,000 once all the timber is cut. Which of the following is true with regard to depletion?

a. Howton will record depletion expense of $240,000 in 2009.

b. Howton’s depletion rate is $120 per acre of timber.

c. Howton should deplete the timber at a rate of 20% (2,000 acres 7 10,000 acres) per year.

d. Depletion will cause Howton’s timber inventory to increase.
Cornerstone Exercises Cornerstone Exercise