ABC Corporation purchased an island that supposedly has commercially extractable oil. The purchase price was P10,000,000. It paid surveying fees of P500,000, successful exploration costs of P400,000 and unsuccessful exploration costs of P50,000. ABC opted to use the full cost method. After these explorations, it was able to establish the island's technical feasibility and commercial viability. Subsequent costs during the month of March include drilling cost of P200,000, trenching cost of P400,000 and other development costs of P400,000. It extracted 30,000 tons of oil from March to December. The estimated remaining oil as of December 31 is 510,000 tons. If the island can be sold at P1,000,000 after extraction, how much is the depletion expense for the year?
ABC Corporation purchased an island that supposedly has commercially extractable oil. The purchase price was P10,000,000. It paid surveying fees of P500,000, successful exploration costs of P400,000 and unsuccessful exploration costs of P50,000. ABC opted to use the full cost method. After these explorations, it was able to establish the island's technical feasibility and commercial viability. Subsequent costs during the month of March include drilling cost of P200,000, trenching cost of P400,000 and other development costs of P400,000. It extracted 30,000 tons of oil from March to December. The estimated remaining oil as of December 31 is 510,000 tons. If the island can be sold at P1,000,000 after extraction, how much is the depletion expense for the year?
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