During 2016, a Company Purchased a Mine at a Cost

Multiple Choice

During 2016, a company purchased a mine at a cost of $3,000,000. The company spent an additional $600,000 getting the mine ready for its intended use. It is estimated that 300,000 tons of mineral can be removed from the mine and the residual value of the mine will be $600,000. During 2016, 45,000 tons of mineral were removed from the mine and 35,000 tons were sold. Which of the following statements is correct with respect to the accounting for the mine?

A) The 2016 net income decreased $450,000 as a result of the mining during the year.
B) The book value of the mine decreased $350,000 during 2016.
C) The inventory of minerals was $450,000 at December 31, 2016.
D) The 2016 cost of goods sold was $350,000.