n July 1, 2019, Lam Company, a calendar year entity, purchased the rights to a mine. The total purchase price was P14,000,000, of which P2,000,000 was allocable to the land. Estimated reserves were 1,500,000 tons. Lam expects to extract and sell 25,000 tons per month. Lam purchased new equipment on July 1, 2019. The equipment was purchased for P8,000,000 and has a useful life of 8 years. However, after all the resources are removed, the equipment will be of no use and will be sold for P500, 000. The depreciation of the equipment for 2019 is a. 937,500 b. 468,700 c. 750,000 d. 500,000
n July 1, 2019, Lam Company, a calendar year entity, purchased the rights to a mine. The total purchase price was P14,000,000, of which P2,000,000 was allocable to the land. Estimated reserves were 1,500,000 tons. Lam expects to extract and sell 25,000 tons per month. Lam purchased new equipment on July 1, 2019. The equipment was purchased for P8,000,000 and has a useful life of 8 years. However, after all the resources are removed, the equipment will be of no use and will be sold for P500, 000. The depreciation of the equipment for 2019 is a. 937,500 b. 468,700 c. 750,000 d. 500,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1, 2019, Lam Company, a calendar year entity, purchased the rights to a mine. The total purchase price was P14,000,000, of which P2,000,000 was allocable to the land. Estimated reserves were 1,500,000 tons. Lam expects to extract and sell 25,000 tons per month. Lam purchased new equipment on July 1, 2019. The equipment was purchased for P8,000,000 and has a useful life of 8 years. However, after all the resources are removed, the equipment will be of no use and will be sold for P500, 000. The depreciation of the equipment for 2019 is
a. 937,500
b. 468,700
c. 750,000
d. 500,000
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