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Depletion Cost Formula

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Depletion Cost is the allocated cost of the natural resource over a specific period. Check FAQs

D = I \cdot (\frac{U}{P})

D - Depletion Cost?I - Initial Cost?U - Amount of Material Used?P - Original Amount of Material Purchased?

Depletion Cost Example

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With units

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Here is how the Depletion Cost equation looks like with Values.

Here is how the Depletion Cost equation looks like with Units.

Here is how the Depletion Cost equation looks like.

50000 = 100000 \cdot (\frac{5000}{10000})

50000 = 100000 \cdot (\frac{5000}{10000})

50000 = 100000 \cdot (\frac{5000}{10000})

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Depletion Cost Solution

Follow our step by step solution on how to calculate Depletion Cost?

FIRST Step Consider the formula

D = I \cdot (\frac{U}{P})

Next Step Substitute values of Variables

∴

D = 100000 \cdot (\frac{5000}{10000})

Next Step Prepare to Evaluate

∴

D = 100000 \cdot (\frac{5000}{10000})

LAST Step Evaluate

∴

D = 50000

Depletion Cost Formula Elements

Variables

Depletion Cost

Depletion Cost is the allocated cost of the natural resource over a specific period.

Symbol: D

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Depletion Cost

Initial Cost

Initial Cost refers to the total expenditure incurred at the outset or commencement of a project, investment, or purchase.

Symbol: I

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Initial Cost

Amount of Material Used

Amount of Material Used refers to the quantity or volume of raw materials or substances consumed in the production process to create finished goods or provide services.

Symbol: U

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Amount of Material Used

Original Amount of Material Purchased

Original Amount of Material Purchased refers to the initial quantity or volume of raw materials acquired by a business through the purchasing process.

Symbol: P

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Original Amount of Material Purchased

Other formulas in Depreciation category

Go Book Value of Process Equipment at any Time during Service Life

V a = V - a \cdot d

Go Annual Depreciation by Straight-Line Method

d = \frac{V - V s}{n}

Go Fixed Percentage Factor using Matheson Formula

f = 1 - {(\frac{V s}{V})}^{\frac{1}{n}}

Go Asset Value using Declining Balance Method

V a = V \cdot {(1 - f)}^{a}

How to Evaluate Depletion Cost?

Depletion Cost evaluator uses Depletion Cost = Initial Cost*(Amount of Material Used/Original Amount of Material Purchased) to evaluate the Depletion Cost, Depletion Cost is an accounting method used primarily in extractive industries to allocate the cost of natural resources (such as minerals, oil, gas, timber, etc.) over the period during which the resources are extracted or consumed. Depletion Cost is denoted by D symbol.

How to evaluate Depletion Cost using this online evaluator? To use this online evaluator for Depletion Cost, enter Initial Cost (I), Amount of Material Used (U) & Original Amount of Material Purchased (P) and hit the calculate button.

FAQs on Depletion Cost

What is the formula to find Depletion Cost?

The formula of Depletion Cost is expressed as Depletion Cost = Initial Cost*(Amount of Material Used/Original Amount of Material Purchased). Here is an example- 4500 = 100000*(5000/10000).

How to calculate Depletion Cost?

With Initial Cost (I), Amount of Material Used (U) & Original Amount of Material Purchased (P) we can find Depletion Cost using the formula - Depletion Cost = Initial Cost*(Amount of Material Used/Original Amount of Material Purchased).

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Depletion Cost Formula

Depletion Cost Example

Depletion Cost Solution

Depletion Cost Formula Elements

Other formulas in Depreciation category

How to Evaluate Depletion Cost?

FAQs on Depletion Cost

Variable Name