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A iron mine purchased 3 years ago for $7 million was estimated to contain 4,000,000 tons of iron. During the past 3 years the amount
A iron mine purchased 3 years ago for $7 million was estimated to contain 4,000,000 tons of iron. During the past 3 years the amount of iron removed was (from year 1-3) 21,000, 18,000, and 20,000 tons, respectively. The gross income obtained in these 3 years was $257,000 for the first year, $320,000 for the second year, and $340,000 for the third year.
Find:
(a) the cost depletion allowance for each year
(b) the percentage of the purchase price depleted thus far.
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