MINA MINING CO. has acquired a tract of mineral land for P50,000,000. Mina Mining estimates that the acquired property will yield 150,000 tons of ore with sufficient mineral content to make mining and processing profitable. It further estimates that 7,500 tons of ore will be mined the first and last year and 15,000 tons every year in between. (Assume 11 years of mining operations.) The land will have a residual value of P1,550,000. Mina Mining builds necessary structures and sheds on the site at a total cost of P12,000,000. The company estimates that these structures can be used for 15 years but, because they must be dismantled if they are to be moved, they have no residual value. Mina Mining does not intend to use the buildings elsewhere. Mining machinery installed at the mine was purchased secondhand at a total cost of P3,600,000. The machinery cost the former owner P9,000,000 and was 50% depreciated when purchased. Mina Mining estimates that about half of this machinery will still be useful when the present mineral resources have been exhausted but that dismantling and removal costs will just about offset its value at that time. The company does not intend to use the machinery elsewhere. The remaining machinery will last until about one-half the present estimated mineral ore has been removed and will then be worthless. Cost is to be allocated equally between these two classes of machinery. 41. What are the estimated depletion and depreciation charges for the 1st year? Depletion Depreciation A. P4,845,000 P870,000 B. P4,845,000 P780,000 C. P2,422,500 P870,000 D. P2,422,500 P780,000 42. What are the estimated depletion and depreciation charges for the 5th year? Depletion Depreciation A. P2,422,500 P1,740,000 B. P2,422,500 P1,560,000 C. P4,845,000 P1,560,000 D. P4,845,000 P1,740,000 43. What are the estimated depletion and depreciation charges for the 6th year? Depletion Depreciation A. P2,422,500 P1,560,000 B. P2,422,500 P1,740,000 C. P4,845,000 P1,560,000 D. P4,845,000 P1,740,000 44. What are the estimated depletion and depreciation charges for the 7th year? Depletion Depreciation A. P2,422,500 P1,380,000 B. P2,422,500 P1,560,000 C. P4,845,000 P1,380,000 D. P4,845,000 P1,560,000 45. What are the estimated depletion and depreciation charges for the 11th year? Depletion Depreciation A. P4,845,000 P1,380,000 B. P4,845,000 P690,000 C. P2,422,500 P1,380,000 D. P2,422,500 P690,000
MINA MINING CO. has acquired a tract of mineral land for P50,000,000. Mina Mining estimates
that the acquired property will yield 150,000 tons of ore with sufficient mineral content to make
mining and processing profitable. It further estimates that 7,500 tons of ore will be mined the
first and last year and 15,000 tons every year in between. (Assume 11 years of mining
operations.) The land will have a residual value of P1,550,000.
Mina Mining builds necessary structures and sheds on the site at a total cost of P12,000,000. The
company estimates that these structures can be used for 15 years but, because they must be
dismantled if they are to be moved, they have no residual value. Mina Mining does not intend to
use the buildings elsewhere.
Mining machinery installed at the mine was purchased secondhand at a total cost of P3,600,000.
The machinery cost the former owner P9,000,000 and was 50% depreciated when purchased.
Mina Mining estimates that about half of this machinery will still be useful when the present
mineral resources have been exhausted but that dismantling and removal costs will just about
offset its value at that time. The company does not intend to use the machinery elsewhere. The
remaining machinery will last until about one-half the present estimated mineral ore has been
removed and will then be worthless. Cost is to be allocated equally between these two classes
of machinery.
41. What are the estimated depletion and
Depletion Depreciation
A. P4,845,000 P870,000
B. P4,845,000 P780,000
C. P2,422,500 P870,000
D. P2,422,500 P780,000
42. What are the estimated depletion and depreciation charges for the 5th year?
Depletion Depreciation
A. P2,422,500 P1,740,000
B. P2,422,500 P1,560,000
C. P4,845,000 P1,560,000
D. P4,845,000 P1,740,000
43. What are the estimated depletion and depreciation charges for the 6th year?
Depletion Depreciation
A. P2,422,500 P1,560,000
B. P2,422,500 P1,740,000
C. P4,845,000 P1,560,000
D. P4,845,000 P1,740,000
44. What are the estimated depletion and depreciation charges for the 7th year?
Depletion Depreciation
A. P2,422,500 P1,380,000
B. P2,422,500 P1,560,000
C. P4,845,000 P1,380,000
D. P4,845,000 P1,560,000
45. What are the estimated depletion and depreciation charges for the 11th year?
Depletion Depreciation
A. P4,845,000 P1,380,000
B. P4,845,000 P690,000
C. P2,422,500 P1,380,000
D. P2,422,500 P690,000
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