In 20x1, ABC Mining Corp. acquired the right to use 1,000 acres of land to mine for gold. The leasecost is ₱50,000,000, and the related exploration costs on the property amounted to ₱10,000,000. Itis the policy of ABC Mining Corp. to capitalize all costs of exploration and evaluation of mineralresources. Intangible development costs for drilling, tunnels, shafts, and wells incurred beforeopening the mine amounted to ₱85,000,000. At the end of the mine’s economic useful life, ABCMining Corp. is required by legislation to restore the site. Estimated restoration costs have a fairvalue of ₱5,000,000. ABC Mining Corp. estimates that the mine will provide approximately100,000,000 ounces of gold. ABC extracted 300,000 ounces of gold in 20x2. How much is thedepletion charge in 20x2?

Q: depreciation is computed on the straight line.

A: Annual depreciation = (Cost or fair value - Salvage value)/Remaining useful life in years

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A: An annuity is a financial product that provides a series of payments to an individual over a…

Q: Sierra Mountain Mining paid $607,000 for the right to extract mineral assets from a 350,000-ton…

A: Cost related to the assets purchased , which has been incurred before the asset put in use will be…

Q: Suppose you have purchased land, a building, and some equipment. At the time of the acquisition, the…

A: Total fir value = land's fair value + building’s fair value + equipment’s fair value = $75,000 +…

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A: Purchase cost = 1,000,000Exploration cost = 800,000Intangible development cost = 500,000

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A: research and development costs are incurred in planning for the innovating products or in making…

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A: Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…

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A: Depletion: It refers to the process of proportionately distributing the cost of the extracting…

Q: a. How much is the depletion charge in 2022? b. Assuming that of the 300,000 ounces of gold…

A: Depletion refers to the reducing in the value of natural resources of the earth from extraction of…

Q: 17. The entity incurred the following in exploring a natural resources on January 1,2021…

A: Depletion is kind of similar expense of depreciation, in the case of depreciation the reduction in…

Q: Lakeland Mountain Mining paid $627,300 for the right to extract mineral assets from a 550,000-ton…

A: Cost related to the assets purchased , which has been incurred before the asset put in use will be…

Q: A consortium of international communications companies contracted for the purchase and installation…

A: A consortium of international communications companies contracted for the purchase and installation…

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A: Wasting assets refers to natural resources. These are productive assets that are physically consumed…

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A: Depletion is used to allocate the costs of extraction of natural resources. These resources include…

Q: 5. In 2018, IRIS Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons…

A: Given information: Cost = ₱4,000,000 Residual value = ₱800,000 Expected tons to be extracted =…

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A: An asset retirement obligation is a legal obligation that is created when a long-lived asset is…

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A: Depreciation is referred to a method of expensing the cost of a capital asset over its useful life.…

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A: The depreciation expense is charged on fixed assets as reduction in the value of fixed assets with…

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A: Depreciation means the loss in value of assets because of usage of assets , passage of time or…

Q: 3. How much is the depletion charge in 20x2? 4. Assuming that of the 300,000 ounces of gold…

A: Statement of profit or loss is one of the most important form of financial statement which is used…

Q: On July 1, 2017, Lethargic Company, a calendar year entity, purchased the rights to a mine.  The…

A: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life…

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A: Journal refers to the process of recording all the monetary transactions which shows all the credit…

Q: REQUIRED: Assume all costs incurred during the exploration and evaluation phases were capitalised,…

A: Maxine Ltd - purchased Mining Property Clarity for $13 Millions  Other Cost incurred are  Right to…

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A: Step 1 Journal is the part of the book keeping.

Q: : On May 1, 2022, Hecala Mining entered into an agreement with the state of New Mexico to obtain the…

A: When the asset is obtained for a period of time, for the purpose of usage and the asset is to be…

Q: P25,000. Salvage value of the mill is estimated to be P65,000 after 20 years. Find the appraisal…

A: Information Provided: Manufacturing costs = P400,000 Bank charges, brokerage costs = P6,000…

Q: On January 1, 2020, PEONY Company showed land with a carrying amount of ₱10,000,000 and building…

A: Revaluation surplus = carrying amount - revalued amount

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A: Cost of mine = Total purchase price - Land value + Development costs + restoration costs =…

Q: ABC Corporation purchased an island that supposedly has commercially extractable oil. The purchase…

A: Depletion expense is determined on the basis of units of oil extracted. The total cost of island is…

Q: On July 1,2021, Phantom Corporation purchased the rights to a mine for a total purchase price of…

A: Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…

Q: UP CAF Company acquired a property for speculation purposes with the intention of selling it at a…

A: Investment property should be recognized in the books of accounts at amount which is spent to…

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.