Crane Corporation acquires a coal mine at a cost of $404,000. Intangible development costs total $101,000. After extraction has occurred, Crane must restore the property (estimated fair value of the obligation is $80,800), after which it can be sold for $161,600. Crane estimates that 4,040 tons of coal can be extracted. If 707 tons are extracted the first year, prepare the journal entry to record depletion.

The journal entry to record depletion is  :

Debit : Depletion Expense $74,235

Credit : Accumulated Depletion $74,235

Explanation:

Depletion Expense = Depletion rate × units extracted during the year

where,

Depletion rate = (Cost - Salvage Value) ÷ Estimated total units

Therefore,

Depletion rate = ($404,000 + $101,000 + $80,800 - $161,600) ÷ 4,040 tons

                        = $ 105 per ton

Therefore,

Depletion Expense = $ 105 per ton × 707 tons

                                = $74,235

Journal Entry :

Debit : Depletion Expense $74,235

Credit : Accumulated Depletion $74,235

the correct answer is d. all of the above

Explanation:

i just took the quiz.