Question
Last Chance Mine (LCM) purchased a coal deposit for $2,282,400. It estimated it would extract 15,850 tons of coal from the deposit. LCM mined the
Last Chance Mine (LCM) purchased a coal deposit for $2,282,400. It estimated it would extract 15,850 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.21 million, $5.1 million, and $4.3 million for years 1 through 3, respectively. During years 13, LCM reported net income (loss) from the coal deposit activity in the amount of ($16,500), $730,000, and $527,500, respectively. In years 13, LCM extracted 16,850 tons of coal as follows: (Leave no answer blank. Enter zero if applicable. Enter your answers in dollars and not in millions of dollars.)
(1) Tons of Coal | (2) Basis | Depletion (2)/(1) Rate | Tons Extracted per Year | ||
---|---|---|---|---|---|
Year 1 | Year 2 | Year 3 | |||
15,850 | $2,282,400 | $144.00 | 4,150 | 7,300 | 5,400 |
c. Using the cost and percentage depletion computations from parts (a) and (b), what is LCMs actual depletion expense for each year?
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