At the beginning of 2020, Modana corp acquired a mine for 845,160. Of this amount, 96,400 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 11,890,000 units of the ore appear to be in the mine. Modana incurred 163,880 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was 38,560. During 2020, 2,570,000 units of ore were extracted and 2,189,000 of these units were sold. (a) Compute the total amount of depletion for 2020. (b) Compute the amount that is charged as an expense for 2020 for the cost of the minerals sold during 2020.

At the beginning of 2020, Modana corp acquired a mine for 845,160. Of this amount, 96,400 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 11,890,000 units of the ore appear to be in the mine. Modana incurred 163,880 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was 38,560. During 2020, 2,570,000 units of ore were extracted and 2,189,000 of these units were sold. (a) Compute the total amount of depletion for 2020. (b) Compute the amount that is charged as an expense for 2020 for the cost of the minerals sold during 2020.

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

On June 1, 2021, ABC Company purchased rights to a mine for P30,000,000, of which, P3,000,000 was allocable to the land. Estimated reserves were 2,250,000 tons. ABC expected to extract and sell 37,500 tons per month. ABC purchased mining equipment on September 30, 2021 for P12,000,000. The mining equipment had a useful life of nine years. However, after all the resource is removed, the equipment will be of no use and will be sold for P750,000. ANSWER THE QUESTION: What is the depletion for 2021?
On July 1, 2015, Lam Company, a calendar year corporation, purchased the rights to mine. The total purchase price was P16,400,000, of which P2,000,000 was allocated to the land. Estimated reserves were 1,800,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased new equipment on July 1, 2015 for P7,500,000. The equipment had a useful life of 8 years. However, after all the resources is removed, the equipment would be of no use and could be sold for P300,000.What amount should be recorded as depreciation of the mining equipment for 2015?
Oriole Products Limited leases property on which copper has been discovered. The lease provides for an immediate payment of $471,960 to the lessor before drilling has begun and an annual rental of $54,990. In addition, the lessee is responsible for cleaning up the waste and debris from drilling and for the costs of reconditioning the land for farming when the mine is abandoned. It is estimated that the legal obligation related to cleanup and reconditioning has a present value of $45,770. Oriole Products has publicly pledged an additional $29,970 (present value) to reclaim the area surrounding the mine. Oriole Products prepares financial statements in accordance with IFRS. Determine the amount that should be capitalized in the Mineral Resources asset account as a result of the lease agreement. Amount capitalized $Enter your answer in accordance to the question statement eTextbook and Media Determine the amount that should be capitalized in the Mineral Resources asset account as a result…
In January, 2021, Melon Corporation purchased a mineral mine for $3,400,000 with removable ore estimated by geological surveys at 2,000,000 tons. The property has an estimated value of $200,000 after the ore has been extracted. The company incurred $1,000,000 of development costs preparing the mine for production. During 2021, 500,000 tons were removed and 400,000 tons were sold. What is the amount of depletion that Melon should expense for 2021
At the beginning of January 2018, Rock Limited acquired a mine for sh34,000,000. Of this amount, sh. 4,000,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 480,000,000 units of a precious ore appear to be in the mine. Rock incurred sh. 5,000,000 of development costs associated with this mine prior to any extraction of minerals and estimates that it will require sh. 1,600,000 to prepare the land for an alternative use when all the ore has been removed. During 2018, 40,000,000 units of ore were extracted and 16,000,000 of these units were sold. Compute the total amount of depletion and the cost of the minerals sold in 2018.
During 2021, Bondoc Corporation acquired a mineral mine for P900,000 of which P150,000 was ascribed to the land value after the mineral has been removed. Geological surveys have indicated that 15 million units of the mineral could be extracted. Also during 2021, 1.2 million units were extracted and 800,000 units were sold. 16) What is the balance of Inventory at the end of 2021? 17) What is the balance of accumulated depletion at the end of 2021?
On July 1, 2022, Trisha Company purchased the rights to a mine for P13,200,000, of which P1,200,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased mining equipment on July 1, 2022 for P9,500,000. The mining equipment had a useful life of 8 years. However, after all the resource is removed, the equipment will be of no use and will be sold for P500,000. 1. What is the depletion for 2022? A. 2,400,000 B. 1,200,000 C. 2,640,000 D. 1,320,000 2. What is the depreciation for 2022? A. 1,800,000 B. 1,125,000 C. 900,000 D. 562,500
At the beginning of 2020, Aristotle Company acquired a mine for $970,000. Of this amount, $100,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 12,000,000 units of ore appear to be in the mine. Aristotle incurred $170,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $40,000. During 2020, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. Instructions Compute the following. a. The total amount of depletion for 2020. b. The amount that is charged as an expense for 2020 for the cost of the minerals sold during 2020.
In January 2022, Proton Mining Corporation purchased a mineral mine for P4,200,000 with removable ore estimated by geological surveys at 2,500,000 tons. The property has an estimated value of P400,000 after the ore has been extracted. Proton incurred P1,150,000 of development costs preparing the property for the extraction of ore. During 2022, 340,000 tons were removed and 300,000 tons were sold. For the year ended December 31, 2022, Proton should record what amount of depletion for the current year? O P594,000 O P456,000 O P673,200 O P516,800
On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased mining equipment on July 1, 2020 for ₱9,500,000. The mining equipment had a useful life of eight years. However, after all the resources are removed, the equipment will be of no use and will be sold for ₱500,000. What is the depletion for 2020?