A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. The depletion expense per ton of ore is

A company purchased a tract of land for its natural resources at a cost of $1,500,000. It expects to mine 2,000,000 tons of ore from this land. The salvage value of the land is expected to be $250,000. The depletion expense per ton of ore is:

$0.750.

$6.000.

$8.000.

$0.625.

$0.875.

Depletion Expense per ton = (Cost - Salvage Value)/Estimated Useful Life (in tons)
Depletion Expense per ton = ($1,500,000 − $250,000)/2,000,000 tons = $0.625/ton