Answer:
a.
1.04 per ton
b.
$32,760,000
c.
Dr. Depletion Expense $32,760,000
Cr. Accumulated Depletion $32,760,000
Explanation:
Depletion is an estimated cost of a natural resource that is extracted. This resource is expensed as the extraction is made.
As per given data
Value of Rights = $494,000,000
Estimated resources = 475,000,000 tons
Resources extracted in the period = 31,500,000 tons
Depletion expense is based on ratio of the amount of extraction in period to the total expected resource.
a.
Depletion Rate = $494,000,000 / 475,000,000 tons = $1.04 per ton
b.
Depletion Expenses = $1.04 x 31,500,000 tons = $32,760,000
c.
Depletion Expense is recorded by the debit entry because the expenses has the debit nature and accumulated depletion is credited because it is an contra asset account which have credit nature.
When any form of natural resource is used at a commercial platform then some amount of price from the profit is charged and is called depletion expense.
The amounts are a. 1.04 per ton, b. $32,760,000.
The rate and expenses are determined by:
Given,
a. Depletion rate is calculated as the ratio of value rights to estimated resources. The formula for depletion rate is:
[tex]\rm Depletion \;rate (DR) = \dfrac {Value \;of \;Rights}{Estimated \;resources}[/tex]
[tex]\rm DR & = \dfrac{\$494,000,000 }{ 475,000,000 \;tons} \\\\ \rm DR &= \$1.04 per\;ton[/tex]
b. Depletion expense is the product of resources used and their cost per unit.
[tex]\rm Depletion \;rate (DR) = Resources \;extracted\; in\; the\; period \times per\; unit\; cost\\\\DR = \$1.04 \times 31,500,000 \;tons \\\\\rm DR = \$32,760,000[/tex]
c. The debit entry of the depletion expense is attached in the image below. The expense is a debit while accumulation is credit as it is considered as an asset.
Therefore, the amounts are a. 1.04 per ton and b. $32,760,000.
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