Enter the total number of consumed units and the total cost per unit of a natural resource into the calculator to determine the depletion expense.

## Depletion Expense Formula

The following formula is used to calculate a depletion expense.

DE = UC * CPU
• Where DE is the depletion expense ($) • UC is the number of units consumed • CPU is the total cost per unit ($/unit)

To calculate the depletion expense, multiply the number of units consumed by the total cost per unit.

In this case, the cost per unit is derived by the following formula:

CPU =( P + E + D )/ UE
• Where CPU is the cost per unit
• P is the cost to purchase the resource
• E is the cost to explore the resource
• D is the cost to develop the resource
• UE is the expected number of units produced from the resource

## What is depletion expense?

A depletion expense is a charge applied to profits in exchange for the use of natural resources. These natural resources can be anything from gas, to oil, to mineral, and more.

## How to calculate the depletion expense?

The following example outlines the steps and information needed to calculate a depletion expense.

First, determine the total cost per unit.

For this example, the cost to purchase, explore, and develop the resource was $1,000,000.00. The total number of units expected to be produced by the resource is 50,000. Therefore, the cost per unit is: 1,000,000 / 50,000 = 20$/unit

Next, determine the total number of units that have been consumed/extracted so far. In this case, the number of consumed units is 20,000.

Finally, calculate the depletion expense using the formula above:

DE = UC * CPU

DE = $20 * 20000 DE =$400,000.00