Problem 28-12 (IAA)At the beginning of current year, Nilli Company purchaseda coal mine for P30,000,000. Removable coal is estimated at1,500,000 tons.The entity is required to restore the land at an estimatedcost of P3,600,000. The land is estimated to have a value ofP3,150,000 after restoration.The entity incurred P7,500,000 of development cost preparingthe mine for production. During the current year, 450,000tons were removed and 300,000 tons were sold.What total amount of depletion should be recorded for thecurrent year?а. 11,385,000b. 10,305,0003,870,000d. 7,590,000с.CS Scanned with CamScanner

Depletion expense is a charge against profits for the use of natural resources.it is most commonly…

At the beginning of current year, Nilli Company purchased a coal mine for P30,000,000. Removable coal is estimated at 1,500,000 tons. Che entity is required to restore the land at an estimated ost of P3,600,000. The land is estimated to have a value of P3,150,000 after restoration. "he entity incurred P7,500,000 of development cost preparing he mine for production. During the current year, 450,000 ons were removed and 300,000 tons were sold. That total amount of depletion should be recorded for the urrent year? - 11,385,000 10,305,000 3,870,000 7,590,000

At the beginning of current year, Nilli Company purchased a coal mine for P30,000,000. Removable coal is estimated at 1,500,000 tons. Che entity is required to restore the land at an estimated ost of P3,600,000. The land is estimated to have a value of P3,150,000 after restoration. "he entity incurred P7,500,000 of development cost preparing he mine for production. During the current year, 450,000 ons were removed and 300,000 tons were sold. That total amount of depletion should be recorded for the urrent year? - 11,385,000 10,305,000 3,870,000 7,590,000

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

A has an investment property acquired at a cost of P2,000,000. Depreciation is estimated to be P50,000 annually and a periodic repair costs of P15,000 per year as well as property tax of P5,000 are incurred by the company on an annual basis. The fair value of the investment property before taxes and repairs amounts to P2,100,000 at year end. What is the carrying value of A's investment property on December 31, 2021 considering that the fair value model is used?
Cimi Manufacturing had the following transactions related to the purchase of long-term assets. During 2025, purchased land for $380,000 with plans to build a new facility. The company pays $23,500 to demolish a building that was on the land and an additional $17,000 to grade the land in preparation for the new building. Construction cost of the new building was $$2,100,000. The parking lot and related lighting cost $41,000. Cimi's employee wages during this time of construction were $214,000. On Nov 5, 2025, Cimi purchased machinery to be install in the new facility. the machine had a price of $28,000 with term 2/10, n/30, and FOB shipping point. Cimi always pays within the discount period. Transporation cost of $680 wer paid. Additionally, the following costs related to installation of the machine were incurred: installation cost $7,600 of which $5,000 of this was parts, testing costs of $900. During installation, damage to a neighboring company's warehouse occured, costing…
Crane Corporation acquires a coal mine at a cost of $404,000. Intangible development costs total $101,000. After extraction has occurred, Crane must restore the property (estimated fair value of the obligation is $80,800), after which it can be sold for $161,600. Crane estimates that 4,040 tons of coal can be extracted.If 707 tons are extracted the first year, prepare the journal entry to record depletion. (If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit enter an account title enter a debit amount enter a credit amount enter an account title enter a debit amount enter a credit amount
On January 1, 2021, EFG Company acquired a building for P1,200,000. Professional fees for legal services and property transfer taxes incurred on the acquisition amounted to P50,000. Start-up costs incurred amounted to P20,000. Operating losses incurred before the planned level of occupancy of the building is achieved amounted to P120,000. Materials labor and overhead incurred for repairs and renovation of the property before it was put to leasable condition amounted to P200,000. Abnormal amounts of wasted material, labor and other resources incurred in developing the property amounted to P60,000. The renovation and repairs were completed on March 31, 2021. The building has an estimated remaining useful life of 10 years with no residual value. EFG Company uses cost model and the straight-line method of depreciation for its investment property. The building has a fair value of P1,400,000 on December 31 ,2021 Required: How much is amount of investment property recognized on…
During the year LM ltd acquired an iron ore mine at a cost of GHS6m. In addition, when all the ore has been extracted (estimated ten years' time) the company will face estimated costs for landscaping the area affected by the mining that have a present value of GHS2m. These costs will still be incurred even if no further ore is extracted. How should this GHS2m future cost be recognised in the financial statements? A. Provision GHS2m and GHS2m capitalised as part of cost of mine B. Provision GHS2m and GHS2m charged to operating costs C. Accrual GHS200,000 per annum for next ten years D. Should not be recognised as no cost has yet arisen
Barton Corporation acquires a coal mine at a cost of $1,800,000. Intangible development costs total $360,000. After extraction has occurred, Barton must restore the property (estimated fair value of the obligation is $180,000), after which it can be sold for $210,000. Barton estimates that 5,000 tons of coal can be extracted. What is the amount of depletion per ton? a. $426 b. $384 c. $468 d. $360
Robin Limited(‘Robin’)purchased a piece of equipment and it was fully operational as at1 February 2019. The equipment was purchased for $320,000. In addition to the purchase price, Robinspent $40,000 to transport the equipment on site and $60,000 of engineering fees to set-up the equipment. It had an estimated useful life of 10 years and an estimated residual value of $60,000. Each year $6,000 is spent on repairs and maintenance. On 1 July 2021, $80,000 was spent on a major upgrade after which the equipment had an expected useful life of 5 years from the date of the upgrade with a revised residual value of $38,000. On 1 March 2023, the equipment was sold for $120,000 cash. Robin’s financial year end balance date is 30 June and Robinuses straight-line depreciation. Record the journal entries required for the disposal of the equipment as at 1 March 2023.
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?
Them Company has a single investment property, which had original cost of P5,800,000 and estimated residual value of P200,000. on January 1, 2018. At Dec. 31, 2020, its fair value was P6,000,000 and at December 31, 2021, it had fair value of P5,900,000. On acquisition date, the property has estimated useful life of 40 years. The company uses the cost model for its investment property and uses straight-line method.What is the carrying value of the investment property at Dec. 31, 2021?
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.
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