Why this is mistaken
Corrective approach
Compute a depletion rate from the supported depletable base and recoverable units. Assign depletion to units extracted, then retain the portion attached to unsold units in inventory and recognize the portion attached to sold units in expense. Reconcile both destinations to total current extraction.
Where to watch
When this mistake may appear
- A natural-resource schedule supplies beginning inventory, units extracted, units sold, and ending inventory.
Check your work
Your work may contain this mistake if:
- Uses extracted units rather than sold units for depletion expense.
- Omits depletion embedded in ending inventory.
- Cannot reconcile extracted-unit depletion between inventory and expense.