At the beginning of 2021, JOJO acquired a mine for P970,000. Of this amount, P100,000 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. JOJO incurred P170,000 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 P40,000. During 2021, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. How much is the total amount of depletion for 2021?
At the beginning of 2021, JOJO acquired a mine for P970,000. Of this amount, P100,000 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. JOJO incurred P170,000 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 P40,000. During 2021, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. How much is the total amount of depletion for 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of 2021, JOJO acquired a mine for P970,000. Of this amount, P100,000 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. JOJO incurred P170,000 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 P40,000. During 2021, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. How much is the total amount of depletion for 2021?
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