Test: CPA Financial Accounting and Reporting (FAR)

1.

A mining company uses the depletion method to allocate the cost of removing natural resources from its mine. Which of the following statements is correct?

The depletion base equals the cost to purchase the mine minus the mine's estimated residual value

Both of the above

Neither of the above

If the number of units mined equaled the number of units sold, the depletion expense would be equal to the number of units mined

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