On January 1, Year 1, Gemstone Mining Company (GMC) paid $10,500,000 cash to purchase the rights to extract raw stone from a surface pit estimated to hold 50,000 tons of useable material. GMC extracted 10,000 tons of stone in Year 1, 20,000 tons of stone in Year 2, and 25,000 tons of stone in Year 3. The rights to the surface pit were expected to have a $500,000 salvage value at the end of Year 3. Which of the following statements models shows how recognizing depletion expense will affect GMCs Year 1 financial statements?

Balance Sheet Cash Flow Assets Income Statement Statement Cash + Stone ReservesLiab. NA Equity 2,000,0000 Rev. - Exp. Net Inc. NA 2,000,000 NA 2,000,000 (2,000,000) NA Balance Sheet Cash Flow Assets Income Statement Statement Cash Stone ReservesLiab. NA Equity 2,000,0000 Exp. Net Inc. NA 2,000,000 NA 2,000,000 (2,000,000) (2,000,000) OA Balance Sheet Cash Flow Statement Assets Income Statement Cash +Stone ReservesLiab. NA Equity 2,000,0000 Rev. - NA Exp. NA Net Inc. NA 2,000,000 NA NA Balance Sheet Cash Flow Statement Assets Income Statement Cash + Stone Reserves Liab. + Equity NA (2,000,000 Rev. -Exp Net Inc. NA NA (2,000,0000) NA NA (2,000,000) OA