In January, Arco Company purchased the rights to a naturalresource for $3,000,000. The estimated recoverable units from thenatural resource amount to 3,000,000 units. During the year, Arcosold 100,000 units of the natural resource at $6 per unit andincurred operating costs other than depletion of $4.50 per unit.Assume a 15 percent specified depletion percentage. Based on thesefacts, compute the company's depletion deduction using both costdepletion and percentage depletion and choosing the higherfigure.
