Reference no: EM132600547

Roan Corp. acquired a tract of land containing an extractable natural resource. The company is required by the government to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 6.2 million tonnes, and that the land will have a value of $1.2 million after restoration.

Relevant cost information follows:

Land $8,000,000

Estimated restoration costs 2,100,000

Question 1: If Roan maintains no inventories, what is the depletion charge per tonne of extracted resource?

a) $1.00

b) $1.32

c) $1.44

d) $1.63