Bering Rock acquires a granite quarry at a cost of $590,000, which is estimated to contain 200,000 tons of granite and is expected to take 6 years to remove. Compute the depletion expense for the first year assuming 38,000 tons were removed and sold.
A) $98,333.
B) $93,158.
C) $38,000.
D) $12,881.
E) $112,100.
E) $112,100.
Explanation: Depletion Expense = (Cost - Salvage Value)/Estimated Useful Life in tons * Tons removed
Depletion Expense = [($590,000 - $0)/200,000] * 38,000 = $112,100
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