Question

On March 31, 2018, M. Belotti purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $364,000, with estimated salable rock of 40,000 tons. During 2018, Belotti loaded and sold 5,700 tons of rock and estimated that 34,300 tons remained at December 31, 2018. At January 1, 2019, Belotti estimated that 11,400 tons still remained. During 2019, Belotti loaded and sold 17,100 tons. Belotti uses the units-of-production method.

Belotti would record depletion in 2018 of: (Do not round depletion rate per ton)

Multiple Choice

• $60,490.

• $51,870.

• $50,395.

• $38,903.

Answer 1

Cost of quarry rights = $364,000

Estimated salable rock = 40,000 tons

Depletion per ton = Cost of quarry rights/Estimated salable rock

= 364,000/40,000

= $9.1 per ton

Tons loaded and sold in 2018 = 5,700

Depletion in 2018 = Tons loaded and sold in 2018 x Depletion per ton

= 5,700 x 9.1

= $51,870

Second option is correct option.

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