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DEPLETION is the process of cost allocation that assigns the original cost of a natural resource to the periods benefited. For example: a mining company purchases mineral rights to a deposit for $5 million for a period of ten years. The cost of the natural resource, $5 million, will be depleted over the ten years of the benefit; i.e., it is the physical exhaustion of a natural resource (e.g., timber, oil and coal).
it is expense like depreciation but it related to natural resources
Agreed with colleagues answer
agree with all the answers provided
Depletion is the movement of the cost of natural resources from a company's balance sheet to its income statements. The objective is to match on the income statement the cost of the natural resources that were sold with the revenues of the natural resources that were sold. The cost of the natural resources sold is referred to as depletion expense.
Conceptually, depletion is similar to the depreciation of property, plant and equipment.
The word " Depletion" means to drain, to exhaust something, where by Asset is mean the valuable thing that a person or a company owns and liability means loan/credit, equity means balance, income means profit and expense means payments.
depletion is the reduction in the value of natural resources, Like depreciation, depletion is the name which is utilized on Natural Resources where as Depreciation and Amortization utilized for non natural resources. Natural resources as described above by Mr. Venkit.
Nature of Depletion is Contra Assets and is presented on the Assets Schedule as a reduction.
Cost allocation method
Related to natural resources
Agree with venkit and abubakr
Depletion is the decrease in the natural resources owned by the company like oil and gas and it is used instead of depreciation so it is the same nature (expense)
agree with mr venkitaraman
