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Early in the current year, Amazon Co. purchased the Rio Silver Mine at a cost of $30,000,000. The mine was estimated to contain 400,000 tons of ore and to have a residual value of $7,500,000 after mining operations are completed. During the year, 115,000 tons of ore were removed from the mine. At year-end, the book value of the mine is:

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abiolataiwo2015

Answer:

$23,531,250

Explanation:

Calculation for the book value of the mine using this formula

Book value =(Cost of purchased-Residual value )/Estimated tons* (Tons of ore-Cost of purchased)

Let plug in the formula

Book value=($30,000,000 - $7,500,000)/400,000

Book value = $56.25

Book value=$56.25*115,000 = $6,468,750;

Book value= $30,000,000 - $6,468,750

Book value= $23,531,250

Therefore the book value of the mine will be $23,531,250

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