On May 1, 2020, JJ Extracting Company purchased the rights to a copper mine for...
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On May 1, 2020, JJ Extracting Company purchased the rights to a copper mine for $4,000,000. The additional costs necessary to prepare the mine for extraction were $800,000. After the copper is extracted from the mine, the land will be sold for an estimated residual amount of $100,000. The Company expects to extract 400,000 tons of copper during a three years period. During 2020, the company extracted 140,000 tons and sold 125,000 tons. Instructions: A. Calculate the depletion for 2020. B. Calculate the amount of depletion included in the cost of inventory at December 31, 2020 and in cost of goods sold for the year ended December 31, 2020
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