Last Chance Mine (LCM) purchased a coal deposit for $1,108,250. It estimated it would extract 17,050 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.28 million, $6.7 million, and $5.1 million for years 1 through 3, respectively. During years 13, LCM reported net income (loss) from the coal deposit activity in the amount of ($21,000), $685,000, and $490,000, respectively. In years 13, LCM actually extracted 18,050 tons of coal as follows:

a. What is LCM's cost depletion for years 1, 2, and 3?

b. What is LCM's percentage depletion for each year (the applicable percentage for coal is 10 percent)?

c. Using the cost and percentage depletion computations from parts (a) and (b), what is LCMs actual depletion expense for each year?

(1) Tons of Coal 17,050 (2) Basis $1,108,250 Depletion (2)/(1) Rate $65.00 Tons Extracted per Year Year 1 Year 2 Year 3 4,350 9,400 4,300 Year Cost Depletion 1 Year Percentage Depletion 1 2 3 Year Depletion Expense 1 2