Question
Crane Company acquired a tract of land containing an extractable natural resource. Crane is required by its purchase contract to restore the land to a
Crane Company acquired a tract of land containing an extractable natural resource. Crane is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2400000 tons, and that the land will have a value of $900000 after restoration. Relevant cost information follows:
Land$7400000
Estimated restoration costs1400000
If Crane maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?
$2.71
$3.08
$3.29
$3.67
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started