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Exercise One On July 1, 2022, Phillips Inc. Invested $480,000 in a mine estimated to have 800,000 tonnes of ore. At the end of production at the mine, the company estimates it will have to spend $150,000 to restore the site to an environmentally acceptable condition. The property will then be sold for $90,000. During the last six months of 2022, 100,000 tonnes of ore were mined and sold. Amortizable Cost per Unit: Amount of Amortization Allocated: Amount to be allocated to the restoration liability: a) Prepare the journal entry to record the depletion expense. Date Particulars Debit Credit

QS 10-13 (Algo) Natural resources and depletion LO P3 Perez Company acquires an ore mine at a cost of $3,500,000. It incurs additional costs of $980,000 to access the mine, which is estimated to hold 2,500,000 tons of ore. 255,000 tons of ore are mined and sold the first year. The estimated value of the land after the ore is removed is $500,000. Calculate the depletion expense from the information given. 1. & 2. Prepare the entry to record the cost of the ore mine and year-end adjusting entry.

Problem 28-3 (IAA) On January 1,2020 Universal Company paid P5,400,000 for property containing natural resource of 2,000,000 tons of ore. The estimated discounted amount of restoring the land after the resource is exhausted is P450,000 and the land will have a value of P650,000 after it is restored for suitable use. Tunnels, bunk houses and other fixed installations are constructed in the amount of P8,000,000. Such expenditures are to be charged to mine improvements. Operations began on January 1,2021 and resources removed totaled 600,000 tons. During 2022, a discovery was made indicating that available resources after 2022 will total 1,875,000 tons. At the beginning of 2022, additional bunk houses were constructed in the amount of P770,000. In 2022, only 400,000 tons were mined because of a strike.

Problem 28-3 (IAA) On January 1,2020 Universal Company paid P5,400,000 for property containing natural resource of 2,000,000 tons of ore. The estimated discounted amount of restoring the land after the resource is exhausted is P450,000 and the land will have a value of P650,000 after it is restored for suitable use. Tunnels, bunk houses and other fixed installations are constructed in the amount of P8,000,000. Such expenditures are to be charged to mine improvements. Operations began on January 1,2021 and resources removed totaled 600,000 tons. During 2022, a discovery was made indicating that available resources after 2022 will total 1,875,000 tons. At the beginning of 2022, additional bunk houses were constructed in the amount of P770,000. In 2022, only 400,000 tons were mined because of a strike.   Compute the Carrying Amount of Wasting Asset  on December 31, 2020. Compute the Depletion on December 31, 2021 Compute the Depreciation on December 31, 2021  Compute the Carrying Amount…

Problem 28-3 (IAA) On January 1,2020 Universal Company paid P5,400,000 for property containing natural resource of 2,000,000 tons of ore. The estimated discounted amount of restoring the land after the resource is exhausted is P450,000 and the land will have a value of P650,000 after it is restored for suitable use. Tunnels, bunk houses and other fixed installations are constructed in the amount of P8,000,000. Such expenditures are to be charged to mine improvements. Operations began on January 1,2021 and resources removed totaled 600,000 tons. During 2022, a discovery was made indicating that available resources after 2022 will total 1,875,000 tons. At the beginning of 2022, additional bunk houses were constructed in the amount of P770,000. In 2022, only 400,000 tons were mined because of a strike.   Compute the Carrying Amount of Wasting Asset  on December 31, 2020. Compute the Depletion on December 31, 2021 Compute the Depreciation on December 31, 2021  Compute the Carrying Amount…

Brief Exercise 10-5 (Algo) Asset retirement obligation [LO10-1] Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs totaled $6.1 million. After the silver is extracted in approximately five years, Smithson is obligated to restore the land to its original condition, including constructing a wildlife preserve. The company's controller has provided the following three cash flow possibilities for the restoration costs: (1) $550,000, 10% probability; (2) $600,000, 50% probability; and (3) $700,000, 40% probability. The company's credit-adjusted, risk-free rate of interest is 5%. What is the book value of the asset retirement liability at the end of one year? Assuming that the actual restoration costs incurred after five years are $646,000, what amount of gain or loss will Smithson recognize on retirement of the liability? Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Enter your answers in…

Brief Exercise 10-5 (Static) Asset retirement obligation [LO10-1] Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs totaled $5.6 million. After the silver is extracted in approximately five years, Smithson is obligated to restore the land to its original condition, including constructing a wildlife preserve. The company's controller has provided the following three cash flow possibilities for the restoration costs: (1) $500,000, 20% probability; (2) $550,000, 45% probability, and (3) $650,000, 35% probability. The company's credit-adjusted, risk-free rate of interest is 6%. What is the book value of the asset retirement liability at the end of one year? Assuming that the actual restoration costs incurred after five years are $596,000, what amount of gain or loss will Smithson recognize on retirement of the liability? Note: Use appropriate factor(s) from the tables provided. Do not round intermediate calculations. Enter your answers in…

Print Item 24 Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and development costs totaled $7.3 million. Extraction activities began on July 1, 2021. After the copper is extracted in approximately six years, Schefter is obligated to restore the land to its original condition, including constructing a park. The company’s controller has provided the following three cash flow possibilities for the restoration costs:    Cash Flow   Probability   1. $ 610,000       25 %   2.   710,000       25 %   3.   810,000       50 %     The company’s credit-adjusted, risk-free rate of interest is 6%, and its fiscal year ends on December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round other intermediate calculations to the nearest whole dollar. Enter your answers in whole dollars.) Required:1. What is the initial cost of the copper mine?2. How much accretion expense will…

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10 A company's depletion base for a coal mine is $4,800,000, and this is recorded on the balance sheet in the coal mine asset account. The company expects to extract 120,000 tons of coal from the mine over the next 20 years. Which journal entry should the company record if it extracts 20,000 tons of coal during its first full year of operation? Debit cost of goods sold for $240,000; credit coal mine for $240,000 Debit coal mine for $800,000; credit inventory for $800,000 Debit inventory for $240,000; credit coal mine for $240,000 Debit inventory for $800,000; credit coal mine for $800,000

Problem 28-10 (IAA) Radical Company acquired a mineral right for P30,000,000 in January 2020. The mine has a recoverable ore estimated at 4,000,000 tons. After it has extracted all the ore, the entity will be required by law to restore the land to the original condition at a discounted amount of P2,000,000. The entity believed that the property can be sold afterwards for P5,000,000. Early in 2020, roads were constructed and other development costs were incurred to aid in the extraction and transportation of the mined ore at a cost of P6,000,000. In 2020, 200,000 tons of ore were mined and sold. On December 31, 2021 a new survey made by a new mining engineer indicated that 5,000,000 tons of ore were available for mining. In 2021, 225,000 tons of ore were extracted and sold. What depletion expense should be recognized for 2021? a. 1,650,000 b. 1,350,000 с. 1,856,250 d. 1,410,000 CS Scanned with CamScanner

QS 8-13 (Algo) Natural resources and depletion LO P3 Perez Company acquires an ore mine at a cost of $2,380,000. It incurs additional costs of $666,400 to access the mine, which is estimated to hold 1,700,000 tons of are. 215,000 tons of ore are mined and sold the first year. The estimated value of the land after the ore is removed is $340,000. Calculate the depletion expense from the information given. 1. & 2. Prepare the entry to record the cost of the ore mine and year-end adjusting entry. Complete this question by entering your answers in the tabs below. Depletion Expense General Journal Calculate the depletion expense from the information given. (Round "Depletion per unit" to 3 decimal places.) Cost Salvage Amount subject to depletion Total units of capacity Depletion per unit Units extracted and sold in period Depletion expense

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