On April 17,2016, the loadstone Mining Company purchased the rights to a coal mine. The purchase price plus additional costs necessary to prepare the mine for extraction of the coal totaled 4,500,000. The company expects to extract 900,000 tons of coal during a four- year period. During 2016, 240,000 were extracted and sold immediately.

Required

1. Calculate the depletion for 2016.

2. Discuss the accounting treatment of the depletion calculated in requirement 1.