Homework Help is Here – Start Your Trial Now!
Business
Accounting
any was able to acqua he low price of P50,000. ower Company constructed a road to the sil P5,000,000. Improvements and oth osts made in 2018 cost P750,000. he improvements to the mine and to t and, it is estimated that the mine can be so when mining activities are complete

any was able to acqua he low price of P50,000. ower Company constructed a road to the sil P5,000,000. Improvements and oth osts made in 2018 cost P750,000. he improvements to the mine and to t and, it is estimated that the mine can be so when mining activities are complete

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question

Thank you!

In 2017, Sunflower Company acquired a silver mine in Eastern Mindanao. Because the mine is located deep in the Mindanao frontier, Sunflower Company was able to acquire the mine for the low price of P50,000. In 2018, Sunflower Company constructed a road to the silver mine costing P5,000,000. Improvements and other development costs made in 2018 cost P750,000. Because of the improvements to the mine and to the surrounding land, it is estimated that the mine can be sold for P600,000 when mining activities are complete. During 2019, five buildings were constructed near the mine site to house the mine workers and their families. The total cost of the five buildings was P2,000,000. Estimated residual value is P200,000. In 2020, geologists estimated that 4,000,000 tons of silver ore could be removed from the mine for refining. During 2020, the first year of operations, only 500,000 tons of silver ore were removed from the mine. However, in 2021, workers mined 1,000,000 tons of silver. During that same year, geologists discovered that the mine contained 3,000,000 tons of silver ore in addition to the original 4,000,000 tons. Development costs of P1,300,000 were made to the mine early in 2021 to facilitate the removal of the additional silver. Early in 2021, an additional building was constructed at a cost of P375,000 to house the additional workers needed to excavate the added silver. This building is not expected to have any residual value. Required: Compute the depletion for 2020 and 2021. 2 Compute the depreciation for 2020 and 2021.
Transcribed Image Text:In 2017, Sunflower Company acquired a silver mine in Eastern Mindanao. Because the mine is located deep in the Mindanao frontier, Sunflower Company was able to acquire the mine for the low price of P50,000. In 2018, Sunflower Company constructed a road to the silver mine costing P5,000,000. Improvements and other development costs made in 2018 cost P750,000. Because of the improvements to the mine and to the surrounding land, it is estimated that the mine can be sold for P600,000 when mining activities are complete. During 2019, five buildings were constructed near the mine site to house the mine workers and their families. The total cost of the five buildings was P2,000,000. Estimated residual value is P200,000. In 2020, geologists estimated that 4,000,000 tons of silver ore could be removed from the mine for refining. During 2020, the first year of operations, only 500,000 tons of silver ore were removed from the mine. However, in 2021, workers mined 1,000,000 tons of silver. During that same year, geologists discovered that the mine contained 3,000,000 tons of silver ore in addition to the original 4,000,000 tons. Development costs of P1,300,000 were made to the mine early in 2021 to facilitate the removal of the additional silver. Early in 2021, an additional building was constructed at a cost of P375,000 to house the additional workers needed to excavate the added silver. This building is not expected to have any residual value. Required: Compute the depletion for 2020 and 2021. 2 Compute the depreciation for 2020 and 2021.
Expert Solution
steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Financial Planning
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
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