Question
Last Chance Mine (LCM) purchased a coal deposit for $2,918,300. It estimated it would extract 18,950 tons of coal from the deposit. LCM mined the
Last Chance Mine (LCM) purchased a coal deposit for $2,918,300. It estimated it would extract 18,950 tons of coal from the deposit. LCM mined the coal and sold it, reporting gross receipts of $1.24 million, $13 million, and $11 million for years 1 through 3, respectively. During years 13, LCM reported net income (loss) from the coal deposit activity in the amount of ($11,400), $550,000, and $502,500, respectively. In years 13, LCM actually extracted 19,950 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) | (2) | Depletion (2)/(1) | Tons Extracted per Year | |||
Tons of Coal | Basis | Rate | Year 1 | Year 2 | Year 3 | |
18,950 | $2,918,300 | $154.00 | 4,500 | 8,850 | 6,600 | |
|
a. What is LCM's cost depletion for years 1, 2, and 3?
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