The accounting term for the systematic allocation of the cost of natural resources is depletion.
Depletion records the gradual use or exhaustion of a natural-resource asset. It is most common in mining, quarrying, petroleum and timber operations, where the asset’s economic value declines as minerals, oil, gas or timber are extracted. Like depreciation, depletion allocates a capitalized cost over the periods that benefit from the asset, but it is specifically associated with natural resources.
Cost depletion typically uses the quantity extracted during a period compared with the estimated total recoverable resource. For example, if a company capitalizes the cost of an oil property and extracts one-twentieth of the estimated recoverable output, roughly one-twentieth of the relevant cost may be allocated, subject to the applicable accounting rules and revised reserve estimates.
Depletion is often confused with depreciation and amortization. Depreciation generally applies to tangible long-lived equipment or buildings, while amortization commonly applies to intangible assets. Depletion concerns the physical reduction of a resource reserve. Tax systems may also recognize percentage depletion, which calculates a deduction using a statutory percentage of qualifying gross income rather than only the unit-based cost calculation.