Iris Company acquired property at the beginning of current year which contains mineral deposit. The acquisition cost of the property was P20,000,000. Geological estimates indicated that 5,000,000 tons of mineral may be extracted. It is further estimated that the property can be sold for P5,000,000 following mineral extraction. For P2,000,000, Iris is legally required to restore the land to a condition appropriate for resale. After acquisition, the following costs were incurred: Exploration cost. Development cost related to drilling of wells.. Development cost related to production equipment.. 3,000,000 6,000,000 4,000,000 .... The production equipment has a useful life of 5 years and the mineral property can be fully depleted in about 8 years. The equipment has no alternative use. During the current year, the company extracted 600,000 tons of the mineral and sold 450,000 tons.

Iris Company acquired property at the beginning of current year which contains mineral deposit. The acquisition cost of the property was P20,000,000. Geological estimates indicated that 5,000,000 tons of mineral may be extracted. It is further estimated that the property can be sold for P5,000,000 following mineral extraction. For P2,000,000, Iris is legally required to restore the land to a condition appropriate for resale. After acquisition, the following costs were incurred: Exploration cost. Development cost related to drilling of wells.. Development cost related to production equipment.. 3,000,000 6,000,000 4,000,000 .... The production equipment has a useful life of 5 years and the mineral property can be fully depleted in about 8 years. The equipment has no alternative use. During the current year, the company extracted 600,000 tons of the mineral and sold 450,000 tons.

Name: What amount of depletion should be recognized for 2019? 2,700,0002,34
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Description: What amount of depletion should be recognized for 2019? 2,700,0002,340,0003,600,0003,120,000 What amount of depreciation is recognized for 2019? 500,000 480,000 800,000360,000 Iris Company acquired property at the beginning of current year which c

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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