When WTA, Inc. purchased rights to extract silver from a mine for a total price of $2.1 million 3 years ago, the estimated 350,000 ounces of silver was to be removed over the next 10 years. A total of 175,000 ounces has been removed and sold thus far. (a) What is the total cost depletion allowed over the 3 years? (b) New exploratory tests indicate that only an estimated 100,000 ounces remain in the veins of the mine. What is the cost depletion factor applicable for the next year?

What will be an ideal response?


(a) CDt = 2,100,000/350,000 = $6.00 per ounce

Cost depletion, 3 years = 6.00(175,000)
= $1,050,000

(b) Remaining investment = 2,100,000 – 1,050,000
= $1,050,000

Remaining silver = 100,000 ounces

New CDt = 1,050,000/100,000
= $10.50 per ounce

Trades & Technology

You might also like to view...

A four-pole motor runs at ____________________ rpm.

Fill in the blank(s) with the appropriate word(s).

Trades & Technology

What type of defrost is normally used for vending machine medium-temperature applications?

What will be an ideal response?

Trades & Technology

Which one of the following is not a softwood typically chosen as finish flooring?

A) Hemlock B) Oak C) Southern pine D) Spruce pine

Trades & Technology

In determining the total force on a 2" diameter test plug with a water head of 10 feet, what is the area of force?

Fill in the blank(s) with the appropriate word(s).

Trades & Technology