Problem 3:In 2018, Lepanto Mining Company purchased property with natural resources forP28,000,000. The property had a residual value of P5,000,000. However, the entity isrequired in restore the property to its original condition at a discounted amount P2, 000,000.In 2018, Lepanto spent P1,000,000 for development cost and P3,000,000 for a building onthe property. Lepanto does not anticipate that the building will have utility after the naturalresources are removed. In 2019, at amount of P1,000,000 was spent for additionaldevelopment on the mine. That tonnage mined and estimated remaining tons for 2018, 2019and 2020 are as follows:TONS EXTRACTEDTONS REMAINING201010,000,0007,000,0003,000,0003,500,000201120122,500,000REQUIRED: Compute the depletion for 2018, 2019 and 2020 and prepare all necessary journalentries.

The financial transactions are initially recorded in the journal form.

Answered: In 2018, Lepanto Mining Company…

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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In 2018, Lepanto Mining Company purchased property with natural resources for P28,000,000. The property had a residual value of P5,000,000. However, the entity is required in restore the property to its original condition at a discounted amount P2, 000,000.