Definition of Depletion

A tax deduction taken for the reduction in amount of natural resources available to a business or partnership. (Gas, Gold, Oil)

Applying "Depletion" to Securities Exams:

Businesses that extract natural resources from a mine or a well will eventually remove the last bit of gold, oil or gas. As the resources are removed from the mine or well the business will reduce the value of the reserves through depletion. The amount of the depleted reserves will be taken as a charge against its earnings.

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