A company purchases an oil well for $200,000 . It estimates that the well contains 250,000 barrels, has a ten-year life, and has no salvage value. If the company extracts and sells 20,000 barrels during the first year, how much depletion expense should be recorded?
a. $40,000
b. $16,000
c. $20,000
d. $100,000
B
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