During 2014, Bolton Corporation acquired a mineral mine for P1,500,000 of which P200,000 wasascribed to land value after the mineral has been removed. Geological surveys have indicated that10 million units of the mineral could be extracted. During 2014, 2,000,000 units were extracted and1,600,000 units were sold. What is the amount of depletion expensed for 2014? a. P300,000 b. P208,000 c. P240,000 d. P260,000
Depreciation Methods
The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.
Depreciation Accounting
In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.
During 2014, Bolton Corporation acquired a mineral mine for P1,500,000 of which P200,000 wasascribed to land value after the mineral has been removed. Geological surveys have indicated that10 million units of the mineral could be extracted. During 2014, 2,000,000 units were extracted and1,600,000 units were sold. What is the amount of depletion expensed for 2014?
a. P300,000
b. P208,000
c. P240,000
d. P260,000
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