Fortune Drilling Company acquires a mineral deposit at a cost of $5,900,000. It incurs additional costs of $600,000 to access the deposit, which is estimated to contain 2,000,000 tons and is expected to take 5 years to extract. Compute the depletion expense for the first year assuming 418,000 tons were mined.
A. $1,233,100.
B. $1,358,500.
C. $1,180,000.
D. $1,300,000.
E. $1,280,000.
Answer: B
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