Church Mining Corporation purchased land containing an estimated 10 million tons of ore for a LO 6 Natural Resource Depletion and Depreciation of Related Plant Assets cost of \(8,800,000\). The land without the ore is estimated to be worth \(1,600,000\). The company expects that all the usable ore can be mined in ten years. Buildings costing 800,000 with an estimated useful life of thirty years were erected on the site. Equipment costing 960,000 with an estimated useful life of ten years was installed. Because of the remote location, neither the buildings nor the equipment has an estimated residual value. During its first year of operation, the company mined and sold 800,000 tons of ore.

1. Calculate the depletion charge per ton.

2. Calculate the depletion expense that Church Mining Corporation should record for the year.

3. Determine the annual depreciation expense for the buildings, making it proportional to the depletion.

4. Determine the annual depreciation expense for the equipment under two alternatives:

(a) using the straight-line method and

(b) making the expense proportional to the depletion.

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