Answer to Question #277483 in Accounting for patra

Question

On March 31,2021,M. Belottipurchased the right to remove gravelfrom an old rock quarry.The gravelIs to be sold as roadbed for highway construction. The cost of the quarry rights was $331,200,with estimated salable rock of 36,000 tons.During 2021,Belotli loaded and sold 5,000 tons of rock and estimated that 31,000 tons remained at December 31,2021. At January 1,2022,Belotti estimated that 15,000 tons still remained. During 2022,Belotli loaded and sold 10,000 tons. Belotti uses the units-of-production method.

Answer 1

Cost of quarry rights =$\$331,200$

Estimated salable rock = 36,000 tons

Depletion per ton = Cost of quarry rights$\div$ Estimated salable rock

= $\frac{\$331,200}{36,000tons}$

= $\$9.2$ per ton

Tons loaded and sold in 2018 = 5,000

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

= 5,700 x 9.2

= $\$52,440$