At the beginning of the current year, JKL Company purchased a mineral mine for P26,400,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, the entity will be required by law to restore the land to its original condition at an estimated cost of P2,100,000. The present value of the estimated restoration cost is P1,800,000. The entity believed that it will be able to sell the property afterwards for P3,000,000. During the current year, the entity incurred P3,600,000 of development cost preparing the mine for production, removed 80,000 tons of ore and sold 60,000 tons. Determine the total amount of depletion should be recorded for the current year. 1,920,000 b. 1,440,000 c. 1,940,000 d. 1,455,000
At the beginning of the current year, JKL Company purchased a mineral mine for P26,400,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, the entity will be required by law to restore the land to its original condition at an estimated cost of P2,100,000. The present value of the estimated restoration cost is P1,800,000. The entity believed that it will be able to sell the property afterwards for P3,000,000. During the current year, the entity incurred P3,600,000 of development cost preparing the mine for production, removed 80,000 tons of ore and sold 60,000 tons. Determine the total amount of depletion should be recorded for the current year. 1,920,000 b. 1,440,000 c. 1,940,000 d. 1,455,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the beginning of the current year, JKL Company purchased a mineral mine for P26,400,000 with removable ore estimated at 1,200,000 tons.
After it has extracted all the ore, the entity will be required by law to restore the land to its original condition at an estimated cost of P2,100,000.
The present value of the estimated restoration cost is P1,800,000.
The entity believed that it will be able to sell the property afterwards for P3,000,000.
During the current year, the entity incurred P3,600,000 of development cost preparing the mine for production, removed 80,000 tons of ore and sold 60,000 tons.
Determine the total amount of depletion should be recorded for the current year.
- 1,920,000 b. 1,440,000 c. 1,940,000 d. 1,455,000
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