Yellowstone Mining Company had total depletable capitalized costs of $711,000 for a mine acquired in early 20X1. It was estimated that the mine contained 790,000 tons of recoverable ore when production began. During 20X1, 39,500 tons were mined, and 150,100 tons were mined in 20X2. Required:

1. 1.Compute the depletion expense in 20X1 and 20X2 for financial accounting purposes.
2. 2-a.In 20X1, 39,500 tons of ore were sold for $3,950,000. For tax purposes, operating expenses of the mine were $470,000. The taxpayer may deduct either cost depletion or percentage depletion, which for the type ore produced is 8 percent of production sold from the mine. (Assume, however, that percentage depletion is limited to the amount of net income from the property.) What would be the amount of percentage depletion allowable in 20X1?
3. 2-b.What would be the amount of cost depletion allowable for tax purposes in 20X1, assuming that capitalized mineral costs are the same for tax purposes as for financial accounting purposes?
4. 2-c.What will be the amount of depletion based on cost that the company could deduct on its tax return in 20X2 if it deducts percentage depletion in 20X1?
5. 2-d.Suppose that in the first three years of the mine's life, the company took percentage depletion totaling $700,000. In the fifth year of the mine's life, production proceeds were $4,000,000. How much percentage depletion could the company deduct in the fifth year, considering allowable percentage depletion rate is 8%?

Compute the depletion expense in 20x1 and 203:2 for financial accounting purposes. {Do not round 1your intermediate calculations.) :What would be the amount of cost depletion allowable for tax purposes in 20X1, assuming that capitalized mineral costs are the same for tax purposes as for financial accounting purposes? Cost depletionIn 20X1, 39,500 tons of ore were sold for $3,950,000. For tax purposes, operating expenses of the mine were $470,000. The taxpayer may deduct either cost depletion or percentage depletion, which for the type ore produced is 8 percent of production sold from the mine. (Assume, however, that percentage depletion is limited to the amount of net income from the property.) What would be the amount of percentage depletion allowable in 20X1? Show lessA Amount of percentage depletion:Suppose that in the first three years of the mine's life, the company took percentage depletion totaling $700,000. In the fifth year of the mine's life, production proceeds were $4,000,000. How much percentage depletion could the company deduct in the fifth year, considering allowable percentage depletion rate is 8%? Amount of percentage depletion