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American Pulp Corp. (APC) has entered into a contract to harvest timber for $450,000. The total estimated available harvest is 150 million board-feet.

a. What is the depletion allowance for years 1 to 3, if 42,45, and 35 million board-feet are harvested by APC in those years?

b. After 3 years, the total available harvest for the original tract was reestimated at 180 million board-feet. Compute the depletion allowances for Years 4 and beyond.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M91373355

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