On January 1, 2019, Minas Company purchased a mining site in the mountains for the extraction of minerals. The site costed P12,500,000. Having no residual value, the mining site was annually depreciated by P1,539,500 throughout its useful life of 10 years. The local government unit requires the company to incur rehabilitation costs at the end of the mining operation. On December 31, 2028, it paid P6,450,000 to settle the decommissioning liability. The applicable discount rate is 8%. note: ROUND OFF TO THE NEAREST PESO question: How much is the gain/loss on the settlement of the decommissioning liability? [Indicate whether it is a gain or loss]
On January 1, 2019, Minas Company purchased a mining site in the mountains for the extraction of minerals. The site costed P12,500,000. Having no residual value, the mining site was annually depreciated by P1,539,500 throughout its useful life of 10 years. The local government unit requires the company to incur rehabilitation costs at the end of the mining operation. On December 31, 2028, it paid P6,450,000 to settle the decommissioning liability. The applicable discount rate is 8%. note: ROUND OFF TO THE NEAREST PESO question: How much is the gain/loss on the settlement of the decommissioning liability? [Indicate whether it is a gain or loss]
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
On January 1, 2019, Minas Company purchased a mining site in the mountains for the extraction of minerals. The site costed P12,500,000. Having no residual value, the mining site was annually depreciated by P1,539,500 throughout its useful life of 10 years. The local government unit requires the company to incur rehabilitation costs at the end of the mining operation. On December 31, 2028, it paid P6,450,000 to settle the decommissioning liability. The applicable discount rate is 8%.
note: ROUND OFF TO THE NEAREST PESO
question:
How much is the gain/loss on the settlement of the decommissioning liability? [Indicate whether it is a gain or loss]
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