A Big Mill Company purchased a piece of land for 4800000 The

A Big Mill Company purchased a piece of land for $4,800,000. There are 200,000 trees on the property available to cut down for usage in their mills. The company cuts down 45,000 trees during the year for use in their mill. Assuming the company can sell the properly for $600,000 when all trees are cut down, what is the depiction expense for the year?

Solution

Answer:

Depletion expenses for the year = (4800000- 600000) *45000/200000= $ 9,45,000

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