Ex13: On April 2, 2017, G.O.A Mining Company pays $1,500,000 for an ore deposit containing 800,000 tons. The company installs machinery in the mine costing $120,000, with an estimated five-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. G.O.A begins mining on May 1, 2017, and mines and sells 90,000 tons of ore during the remaining eight months of 2017. Prepare the December 31, 2017, entries to record both the ore deposit depletion and the mining machinery depreciation, Mining machinery depreciation should be in proportion to the mine's depletion. a) Depletion of mining company: Date Debit Credit b) Depreciation of machine: Date Debit Credit

Ex13: On April 2, 2017, G.O.A Mining Company pays $1,500,000 for an ore deposit containing 800,000 tons. The company installs machinery in the mine costing $120,000, with an estimated five-year life and no salvage value. The machinery will be abandoned when the ore is completely mined. G.O.A begins mining on May 1, 2017, and mines and sells 90,000 tons of ore during the remaining eight months of 2017. Prepare the December 31, 2017, entries to record both the ore deposit depletion and the mining machinery depreciation, Mining machinery depreciation should be in proportion to the mine's depletion. a) Depletion of mining company: Date Debit Credit b) Depreciation of machine: Date Debit Credit

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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12. On July 23 of the current year, Dakota Mining Company pays $7,398,720 for land estimated to contain 8,808,000 tons of recoverable ore. It installs and pays for machinery costing $968,880 on July 25. The company removes and sells 451,000 tons of ore during its first five months of operations ending on December 31. Depreciation of the machinery is in proportion to the mine's depletion as the machinery will be abandoned after the ore is mined. Required:Prepare entries to record the following.(a) The purchase of the land.(b) The cost and installation of machinery.(c) The first five months' depletion assuming the land has a net salvage value of zero after the ore is mined.(d) The first five months' depreciation on the machinery.
James purchased a factory machine of Php 51,000 on January 1, 2015. The machine is expected to have a salvage value of Php 6,000 at the end of its 5 year useful life. During the useful life, the machine is expected to be used for 5,000 hours. The machine was used as under: Years Hours used 2015 1.200 2016 800 2017 1.150 2018 850 2019 1.000
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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?
XYZ Co. completed construction of a new silver mine in 2020. The cost of direct materials for the construction was $2,500,000 and direct labour was $2,300,000. In addition, the company allocated $280,000 of general overhead costs to the project. To finance the project, the company obtained a loan of $2,700,000 from its bank. The loan funds were drawn on February 24, 2020 and the mine was completed on November 24, 2020. The interest rate on the loan was 9% p.a. During construction, excess funds from the loan were invested and earned interest income of $24,000. The remainder of the funds needed for construction was drawn from internal cash reserves in the company. The company has also publicly made a commitment to clean up the site of the mine when the extraction operation is complete. It is estimated that the mining of this particular seam will be completed in 13 years, at which time restoration costs of $150,000 will be incurred. The appropriate discount rate for this type of…
On January 1,2015, GOGO Company purchased land with valuable natural ore deposits for $20,000,000. At that time, the estimated recoverable output from the mine is $4,000,000 metric tons of ore after which the land is expected to have residual value of $3,000,000. To facilitate the extraction and transportation of the ore, roads were constructed amounting to $1,500,000. In 2015, 2,000,000 metric tons were mined. At the end of 2016, a new estimate of remaining recoverable ore indicated 2,500,000 metric tons are available. During 2016, 1,500,000 metric tons were mined. How much is the depletion expense for the year 2016?
On January 1, 2017 MKG, Inc. paid $350,000 for a piece of equipment that is expected to have a 10 year useful life. In this industry the residual value of equipment is initially estimated at 10% of the asset's cost. On January 1, 2021 MKG Inc. performed an extraordinary repair on the equipment at a cost of $60,000 that extended the useful life to a total of 16 years and changed the residual value to $20,000. Assuming. MKG Inc. uses the straight-line depreciation method, calculate the amount of depreciation expense reported on the December 31, 2021 income statement? Answer: $
7. Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one million tons of ore within the mine. Gimli paid $3114 for the rights and expects to harvest the ore over the next ten years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 90,000 tons Year 3: 100,000 tons Year 4: 110,000 tons Year 5: 130,000 tons Calculate the depletion expense for the next five years, and create the Journal entry for year one.
E10-10 On July 1, 2002, Phillips Inc. invested $480,000 in a mine estimated to have 800,000 tonnes of ore. At the end of production at the mine, the company estimates it will have to spend $150,000 to restore the site to an environmentally acceptable condition. The property will then be sold for $90,000. During the last six months of 2002, 100,000 tonnes of ore were mined and sold. Instructions (a) Prepare the journal entry to record the amortization expense. (b) Assume that 100,000 tonnes of ore were mined but only 80,000 were sold. How much amortiza- tion expense is recorded in 2002? How are the costs applied to the 20,000 unsold tonnes?
The ABC Company closes its books every December 31. On August 1, 2011, they bought a machine for P300,000. The machi ne is expected to have a useful life of 10 years with no scrap value. On August 1, 2015, P36,000 was paid for the major overh aul of the machine which extended the life of the machine for another two years. The machine was sold for P185,000 on June 30, 2016. The depreciation expense for the machine for 2015 was: a P28,750 b. P30,000 C. P27,000 d. P32,000 e. None of the above Answer (LETTER ONLY):
10. Onslow Company purchased a used machine for $240,000 cash on January 2. On January 3, Onslow paid $10,000 to wire electricity to the machine. Onslow paid an additional $2,000 on January 4 to secure the machine for operation. The machine will be used for six years and have a $28,800 salvage value. Straight-line depreciation is used. On December 31, at the end of its fifth year in operations, it is disposed of. 2. Prepare journal entries to record depreciation of the machine at December 31.