24.+4Data for Hill Oil Company are as follows for all US properties:Acquisition costs of unproved property, net of impairment. . $ 300,000Nondrilling evaluation costs of unproved property-direct ..400,000Abandoned costs....100,000Dry holes on unproved property600,000Capitalized costs of proved property..2,400,000Costs of major development project (costs not included above)800,000Accumulated DD&A (assume same for part a and part b)...Deferred income taxes...PV of future gross revenuePV of future related costs...Income tax effects-books versus tax.LCM of unproved properties...700,000500,0004,100,0001,400,000500,000550,000REQUIRED:a. Apply the full cost ceiling test and record any entries necessary, assumingthat all possible costs are excluded from amortization.b. Apply the full cost ceiling test and record any entries necessary, assumingthat all possible costs are being amortized.

Hill Oil Company - Full Cost Ceiling TestData:Acquisition costs of unproved property (net):…

Answered: 24. +4 Data for Hill Oil Company are as…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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17.ABC Company acquired a tract of land containing an extractable natural resource. ABC Co. is required by the purchase contract to restore the land to a condition suitable for recreational use after extraction of the natural resource. Geological surveys estimated that the recoverable reserves will be 200,000 tons and that the land will have a value of P1,000,000 after restoration. Relevant costs information are the following: Land acquisition cost P8,000,000; Estimated restoration cost P500,000; Development and geological surveys cost P1,500,000. What should be the depletion rate per ton of resource?
3. ABC Company acquired a tract of land containing an extractable natural resource. ABC is required by the purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2,500,000 tons and that the land will have a value of P1,000,000 after restoration. Relevant cost information follows: Land .- P9,000,000 and Estimated restoration costs - 1,500,000. What should be the depletion charge per ton of extracted material?
(Adapted) 5. Joseph Company acquired a tract of land containing an extractable natural resource. Joseph is required by the purchase contract to restore the land to a condition suitable fo recreational use after it has extracted the natural resource Geological surveys estimate that the recoverable reserves will be 2,500,000 tons and that the land will have a value of P1,000,000 after restoration. Relevant cost information follows: P9,000,000 Land Present value of estimated restoration costs 1,500,000 What should be the depletion charge per ton of extracted material? a. P4.00 (Adapted) •b. P3.80 c. P3.60 d. P3.20
2. Cooler Company acquired a tract of land containing an extractable natural resource. Cooler is required by the purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 5,000,000 tons and that the land will have of P1,000,000 after restoration. Relevant cost information as follows:Land P 9,000,000Estimated restoration costs 1,500,000If Cooler maintains no inventories of extracted material, what should be the depletion expense per ton of extracted material?
Given the following information and assuming straight-line depreciation to zero, what is the IRR of this project? Initial investment = $400,000; life = four years; cost savings = $125,000 per year; salvage value = $20,000 in year 5; tax rate = 34%; discount rate = 12%.Multiple Choice7.51%9.43%10.24%6.25%8.15%
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1. In 20X4, ABC Mining Inc. purchased land for P5,600,000 that had a natural resource supply estimated at 4,000,000 tons. When the natural resources are removed, the land has an estimated value of P640,000. The required restoration cost for the property is estimated to be P800,000. Development and road construction costs on the land were P560,000, and a building was constructed at a cost of P88,000 with an estimated P8,000 salvage value when all the natural resources have been extracted. During 20X5, additional development costs of P272,000 were incurred, but additional resources were not discovered. Production for 20X4 and 20X5 was 700,000 tons and 900,000 tons, respectively. Round depletion and depreciation rates to 2 decimal places. In the year 20X5, the total inventoriable cost is?
The components of the cost of a major item of equipment are given below: $ Purchase price 780,000 Import duties 117,000 VAT (refundable) 78,000 Site preparation 30,000 Installation 28,000 Testing 10,000 Initial losses before asset reaches planned performance 50,000 Discounted cost of dismantling and removal at end of useful life 40,000 1,133,000 What amount should be recognised as the cost of the asset in accordance with IAS 16 Property, plant and equipment ?
16. Determine the amount of the total amortization cost base, assuming (1) no exclusions from the amortization base, and (2) all possible costs are excluded from the amortization base. Unproved property-cost $80,000, amount impaired $20,000 (if excluded) Unproved property-abandoned- -cost $30,000, no impairment Unproved property-found proved reserves- cost $18,000, no impairment Unproved property purchased- cost $50,000 Wells-in-progress on unproved property $100,000 Well completed on unproved property dry-hole cost $250,000 Total (1) Amount |(2) Amount― no exclusions all exclusions ?
A9
3. In 20X4, ABC Mining Inc. purchased land for P5,600,000 that had a natural resource supply estimated at 4,000,000 tons. When the natural resources are removed, the land has an estimated value of P640,000. The required restoration cost for the property is estimated to be P800,000. Development and road construction costs on the land were P560,000, and a building was constructed at a cost of P88,000 with an estimated P8,000 salvage value when all the natural resources have been extracted. During 20X5, additional development costs of P272,000 were incurred, but additional resources were not discovered. Production for 20X4 and 20X5 was 700,000 tons and 900,000 tons, respectively. Round depletion and depreciation rates to 2 decimal places. Depreciation for 20x4 is?
Vijay

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