Lakeland Mountain Mining paid $627,300 for the right to extract mineral assets from a 550,000-ton deposit. In addition to the purchase price, Lakeland also paid a $800 filing fee, a $1,900 license fee to the state of Nevada, and $85,000 for a geological survey of the property. Because Lakeland purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year, Lakeland removed and sold 60,000 tons of the minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing (a) the purchase of the minerals (debit Mineral asset). (Do not record payment for any additional costs associated with the minerals. We will do this in entry b.) Date Accounts and Explanation a. Debit Credit

Lakeland Mountain Mining paid $627,300 for the right to extract mineral assets from a 550,000-ton deposit. In addition to the purchase price, Lakeland also paid a $800 filing fee, a $1,900 license fee to the state of Nevada, and $85,000 for a geological survey of the property. Because Lakeland purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year, Lakeland removed and sold 60,000 tons of the minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) Begin by journalizing (a) the purchase of the minerals (debit Mineral asset). (Do not record payment for any additional costs associated with the minerals. We will do this in entry b.) Date Accounts and Explanation a. Debit Credit

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter11: Environmental Regulation And Sustainability

Section: Chapter Questions

Problem 9QAP

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Sunset Mountain Mining paid $362,300 for the right to extract mineral assets from a 350,000-ton deposit. In addition to the purchase price, Sunset also paid a $300 filing fee, a $2,400 license fee to the state of Nevada, and $55,000 for a geological survey of the property. Because Sunset purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year, Sunset removed and sold 40,000 tons of the minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.)
Sierra Mountain Mining paid $607,000 for the right to extract mineral assets from a 350,000-ton deposit. In addition to the purchase price, Sierra also paid a $700 filing fee, a $2,300 license fee to the state of Nevada, and $55,000 for a geological survey of the property. Because Sierra purchased the rights to the minerals only and did not purchase the land, it expects the asset to have zero residual value. During the first year, Sierra removed and sold 50,000 tons of minerals. Make journal entries to record (a) purchase of the minerals (debit Minerals), (b) payment of fees and other costs, and (c) depletion for the first year. (Record debits first, then credits. Select the explanation on the last line of the journal entry table.) G Begin by journalizing (a) the purchase of the minerals (debit Mineral asset). (Do not record payment for any additional costs associated with the minerals. We will do this in entry b.) Date Accounts and Explanation a. Debit Credit
B3.
7. A company operates a mine in a country where legislation requires that the owner must restore the site on completion of its mining operations. The cost of restoration includes the replacement of the overburden, which must be removed before mining operations commence. A provision for the costs to replace the overburden was recognized as soon as the overburden was removed. The amount provided was recognized as part of the cost of the mine and is being depreciated over the mine's useful life. The carrying amount of the provision for restoration costs is P500,000, which is equal to the present value of the restoration costs.
At the beginning of the current year, JKL Company purchased a mineral mine for P26,400,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, the entity will be required by law to restore the land to its original condition at an estimated cost of P2,100,000. The present value of the estimated restoration cost is P1,800,000. The entity believed that it will be able to sell the property afterwards for P3,000,000. During the current year, the entity incurred P3,600,000 of development cost preparing the mine for production, removed 80,000 tons of ore and sold 60,000 tons. Determine the total amount of depletion should be recorded for the current year. 1,920,000 b. 1,440,000 c. 1,940,000 d. 1,455,000
The Jackson Mining Company paid $1,000,000 for the right to explore for a coal deposit on 500 acres of land in Pennsylvania. Costs of exploring for the coal deposit totaled $800,000 and intangible development costs incurred in digging and erecting the mine shaft were $500,000. In addition, Jackson purchased new excavation equipment for the project at a cost of $600,000. After the coal is removed from the site, the equipment will be sold. Jackson is required by its contract to restore the land to a condition suitable for recreational use after it extracts the coal. The company has provided the following three cash flow possibilities (A, B, and C) for the restoration costs to be paid in three years, after extraction is completed: Cash Outflow A $500,000 B 400,000 C 900,000 The company's credit-adjusted risk-free interest rate is 8% (PV Factor is 0.7938). 2,688,962 O2,790,000 3,390,000 O 3,288,962 Probability 40% 50% 10%
At the beginning of 2021, JOJO acquired a mine for P970,000. Of this amount, P100,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 12,000,000 units of ore appear to be in the mine. JOJO incurred P170,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was P40,000. During 2021, 2,500,000 units of ore were extracted and 2,100,000 of these units were sold. How much is the total amount of depletion for 2021?
At the beginning of 2017, Carla Vista Company acquired a mine for $ 891,000. Of this amount, $ 90,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 5,400,000 tons of the ore appear to be in the mine. Carla Vista incurred $ 45,000 of development costs associated with this mine prior to any extraction of minerals. It also determined that the fair value of its obligation to prepare the land for an alternative use when all of the mineral has been removed was $ 18,000. During 2017, 1,080,000 units of ore were extracted and 900,000 of these units were sold. Compute the following.
Devo Oil Company acquired property rights to search for natural resources on land that it is convinced has oil reserves, for $15,400,000. The contract requires that Devo restore the property to a status usable for a park after drilling and extraction are complete. The estimated cost of this restoration is $2,350,000. Devo incurs exploration costs of $1,320,000 and intangible development costs of $1,535,000. Geological surveys suggest that approximately 1,100,000 barrels of oil can be extracted from the site. In 2025, Devo extracts 235,000 barrels of oil. Instructions (4) If 150,000 barrels of oil are sold within the initial year, what is the cost of goods sold for the oil and the remaining inventory balance?
PUP CAF Mining Company purchased a tract of land containing mineral resources for P54,000,000. The purchase contract contained a provision that PUP CAF is required to restore the land suitable for factory use after it has extracted the mineral resource. Geological survey has indicated that 2,400,000 tons of ore could be extracted. The property has an estimated salvage value of P6,000,000 after the ore has been extracted and the land is restored. The estimated cost of restoration and geological survey is P7,200,000 which is the present value at the date of acquisition. Assuming that PUP CAF does not maintain inventories of extracted ores, how much should be charged to depletion expense per ton of extracted mineral ore?
On December 1, 2018, Joy Corporation decided to dispose of an item of plant that is carried in its records at a cost of P450,000, with accumulated depreciation of P80,000. Depreciation on the plant since it was originally acquired has been charged at P5,000 per month. The company undertook all the necessary actions to be able to classify the asset as held for sale. It is estimated that it could sell the plant for its fair value, P350,000, incurring P10,000 selling costs in the process. On December 31, 2018, the plant had not been sold but, due to a shortage of this type of plant, there had been an increase in the fair value to P360,000 while expected costs to sell remain at P10,000. Case 1: Any gain on the subsequent increase in the fair value less cost to sell of a noncurrent asset classified as held for sale should be treated as follows: a. The gain should be recognized in full. b. The gain should not be recognized. c. The gain should…
Us Oil Company acquired property rights to search for natural resources on land that it is convinced has oil reserves, for $15,418,620. The contract requires that Oriole restore the property to a status usable for a park after drilling and extraction are complete. The estimated cost of this restoration is $2,363,000. Oriole incurs exploration costs of $1,335,000 and intangible development costs of $1,770,000. Geological surveys suggest that approximately 1,113,000 barrels of oil can be extracted from the site. In 2025, Oriole extracts 248,000 barrels of oil. What journal entry is required to record the extraction of the oil for the first year?