Question
A coal mining company has owned a mine for the past five years. During this time, the following tonnage of ore has been removed each
A coal mining company has owned a mine for the past five years. During
this time, the following tonnage of ore has been removed each year: 25,000;
32,000; 36,000; 30,000; and 28,000 tons. The mine is estimated to contain
a total of 500,000 tons of coal. The initial cost of the mine isPhp12,000,000. If the company had a gross income for this coal of
Php2,200 per ton for the first two years, and Php3,000 per ton for the lastthree years, determine the depletion charge for each year using the unitpercentage method and the percentage method. The percentage depletion ofcoal is 10%. Which do you think is the better depletion method for thissituation? Why?
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