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

See similar textbooks

Similar questions

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?
17. The entity incurred the following in exploring a natural resources on January 1,2021Acquisition cost of the land P10,000,000Development cost 5,000,000Exploration cost 6,000,000Purchase of equipment 3,000,000The entity expects to mine a total of 5,000,000 tons of natural gas, it is also estimated that 1,000,000 of natural gas will be extracted every year. The useful life of the equipment is 6 years, the equipment is used over a several project not just in that specific natural resources. On 2021 the entity extracted 1,500,000 tons of natural gas. How much is the depletion for the year 2021?
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?
16. Ebasan Company is involved in the exploration for mineral resources. Its policy is to recognize exploration assets and measure them initially at cost. The following amounts were extracted from Ebasan's financial statements: Trenching and sampling expenditure P500,000 300,000 Drilling rigs used for exploration, carrying amount Drilling rigs used for exploration, depreciation expense 30,000 In accordance with PFRS 6 Exploration for and evaluation of mineral resources, at what amount should intangible exploration assets be initially recognized at in the financial statements? A. 500,000 B. 800,000 C. 530,000 D. 830,000
PC Shopping Network may upgrade its modem pool. It last upgraded 1 year ago, when it spent $114 million on equipment with an assumed life of 4 years and an assumed salvage value of $22 million for tax purposes. The firm uses straight-line depreciation. The old equipment can be sold today for $86 million. A new modem pool can be installed today for $156 million. This will have a 3-year life, and will be depreciated to zero using straight-line depreciation. The new equipment will enable the firm to increase sales by $15 million per year and decrease operating costs by $12 million per year. At the end of 3 years, the new equipment will be worthless. Assume the firm's tax rate is 35% and the discount rate for projects of this sort is 13%. (Enter your answers in millions. For example, an answer of $13,000,000 should be entered as 13. Use minus sign to enter cash outflows, if any.) a. What is the net cash flow at time 0 if the old equipment is replaced? (Do not round intermediate…
For the first collumn how much do the current liabilites. What is the difference between current and total liabilites?
How much is the total amount that would normally be reported as investment property? A. 130,000,000 B. 128,000,000 C. 137,000,000 D. 106,000,000 Show solution
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?
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 ?
The components of the cost of a major item of equipment are given below.GHSPurchase price 780,000Import duties 117,000VAT (refundable) 78,000Site preparation 30,000Installation costs 28,000Pre-production costs 18,000Initial operating losses before the asset reaches planned performance 50,000Estimated cost of dismantling and removal of the asset, recognized as a provision under IAS 37 Provisions,Contingent Liabilities and Contingent Assets 100,0001,201,000In accordance with IAS 16 Property, Plant and Equipment, what amount should be recognized as the cost of the asset?

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS