On January 1, 2020, Hilary 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 the original condition at an estimated cost of P2,200,000. The present value of the estimated restoration cost is P1,800,000. The property can be sold afterwards for P3,000,000. During 2020, the entity incurred P2,000,000 exploration cost and P1,600,000 development cost preparing the mine for productions. The entity removed 80,000 tons of ore and sold 60,000 tons of ore in the current year. What amount of depletion should be included in cost of sales for the current year? 1,920,000 1,440,000 1,455,000 1,940,000 What is the depletion for the current year? 1,920,000 1,440,000 1,940,000 1,455,000
On January 1, 2020, Hilary 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 the original condition at an estimated cost of P2,200,000. The present value of the estimated restoration cost is P1,800,000. The property can be sold afterwards for P3,000,000. During 2020, the entity incurred P2,000,000 exploration cost and P1,600,000 development cost preparing the mine for productions. The entity removed 80,000 tons of ore and sold 60,000 tons of ore in the current year. What amount of depletion should be included in cost of sales for the current year? 1,920,000 1,440,000 1,455,000 1,940,000 What is the depletion for the current year? 1,920,000 1,440,000 1,940,000 1,455,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020, Hilary 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 the original
condition at an estimated cost of P2,200,000. The present value of the estimated restoration cost is P1,800,000. The
property can be sold afterwards for P3,000,000. During 2020, the entity incurred P2,000,000 exploration cost and P1,600,000 development cost preparing the mine for
productions. The entity removed 80,000 tons of ore and sold 60,000 tons of ore in the current year. What amount of depletion should be included in cost of sales for the current year?
1,920,000
1,440,000
1,455,000
1,940,000
What is the depletion for the current year?
1,920,000
1,440,000
1,940,000
1,455,000
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