on July 1, 2022, Trisha Company purchased the rights to a mine for P13,200,000, of which P1,200,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expects to extract and sell 25,000 tons per month The entity purchased mining equipment on July 1, 2022 for P9,500,000. The mining equipment had a useful life of 8 years. However, after all the resource is removed, the equipment will be of no use and will be sold for P500,000. 2. What is the depreciation for 2022?

on July 1, 2022, Trisha Company purchased the rights to a mine for P13,200,000, of which P1,200,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expects to extract and sell 25,000 tons per month The entity purchased mining equipment on July 1, 2022 for P9,500,000. The mining equipment had a useful life of 8 years. However, after all the resource is removed, the equipment will be of no use and will be sold for P500,000. 2. What is the depreciation for 2022?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On January 1, 2021, a business paid $6.400,000 for land with mineral deposits. Over the following six years, the company plans to mine 1.600,000 tonnes of ore. The corporation also spent $800,000 on mining equipment. The equipment has a residual value of $160,000 and a 10-year projected life, and it can be used in other mines. The company will have mined and sold 240,000 tonnes by the end of 2021. Depreciation on the equipment is estimated to be $96,000 [($800,000 $160,000) (240,000 tons/1,600,000 tonnes) by management. Which of the statements below is correct? Multiple Choice Management should depreciate the equipment evenly over six years. Management should not subtract the residual value in calculating depreciation. Management should depreciate the equipment over 10 years. Management's calculation is correct.
LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million tons of minerals from this lad over the next 20 years, at which time, residual value shall be P6,000,000. The following costs were also incurred related to the mining activities: Successful exploration costs, P10,000,000 and cost of P1,600,000 for dry wells. During the first 2 years of the mine’s operations, 300,000 tons were mined each year and sold for P80 per ton. How much would be the depletion for the second year?
In 2018, DAISY Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons of extractable mineral deposits. The estimated value of the property after the mineral has been removed is ₱800,000. Extraction activities began in 2019 and by the end of the year, 20,000 tons had been recovered and sold. In 2020, geological studies indicated that the total amount of mineral deposits had been underestimated by 60,000 tons. During 2020, 30,000 tons were extracted and 28,000 tons were sold. How much depletion expense is to be presented in the cost of sales of 2020? ₱ 392,000 ₱ 420,000 ₱ 600,000 ₱ 436,364
On July 1, 2020, MAGNOLIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased mining equipment on July 1, 2020 for ₱9,500,000. The mining equipment had a useful life of eight years. However, after all the resources are removed, the equipment will be of no use and will be sold for ₱500,000. What is the depreciation for 2020? On July 1, 2020, MAGNOLIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased mining equipment on July 1, 2020 for ₱9,500,000. The mining equipment had a useful life of eight years. However, after all the resources are removed, the equipment will be of no use and will be sold for ₱500,000. What is the depletion for 2020?
On January 1, 2021, Dhong Mining Corp. purchased an ore mine at P30,000,000. The cost of exploration was P6,000,000, while additional development costs were P4,000,000. The resource deposit is estimated to be around 2,000,000 units. A total of 150,000 units were extracted in 2021. 250,000 units were extracted the subsequent year. Additional development expenditures for the mine were P2,000,000.00 at the beginning of 2023. The entity also calculated that there are still 2,500,000 units in the resource deposit. In 2023, 300,000 units were extracted. How much is the computed depletion rate in 2021? How much is the depletion in 2022? How much is the depletion in 2023?
Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and development costs totaled $7.5 million. Extraction activities began on July 1, 2024. After the copper is extracted in approximately six years, Schefter is obligated to restore the land to its original condition, including constructing a park. The company's controller has provided the following three cash flow possibilities for the restoration costs: 1. 2. 3. Cash Flow $ 630,000 730,000 830,000 Probability 38% 30% 40% The company's credit-adjusted, risk-free rate of interest is 4%, and its fiscal year ends on December 31. Note: Use appropriate factor(s) from the tables provided. Round other intermediate calculations to the nearest whole dollar. Enter your answers in whole dollars. (FV of $1, PV of $1. FVA of $1. PVA of $1. FVAD of $1 and PVAD of $1) Required: 1. What is the initial cost of the copper mine? 2. How much accretion expense will Schefter report in its 2024 income statement? 3. What is the book…
On March 31, 2024, a company purchased the right to remove gravel from an old rock quarry. The gravel is to be sold as roadbed for highway construction. The cost of the quarry rights was $232,200, with estimated salable rock of 27,000 tons. During 2024, The company loaded and sold 5,000 tons of rock and estimated that 22,000 tons remained on December 31, 2024. On January 1, 2025, the company estimated that 10,000 tons still remained. During 2025, the company loaded and sold 15,000 tons. The company uses the units-of-production method. The company would record depletion in 2024 in the amount of: Note: Do not round depletion rate per ton. Multiple Choice $43,340. $52,773. $32,250. $43,000.
On July 1, 2017, Lethargic Company, a calendar year entity, purchased the rights to a mine. The total purchase price was 14,000,000 of which 2,000,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased new equipment on July 1, 2017. The equipment was purchased for 8,000,000 and had a useful life of 8 years. However, after all the resource is removed, the equipment will be of no use and will be sold for 500,000. What is the depletion for 2017?
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…
Pinky and the Brain Ltd acquired an item of plan at a gross cost of $680,000 on October 20X2. The plant has an estimated life of 10 years with residual value equal to 15% of its gross cost. The company uses straight line depreciation charge on a time-apportioned basis. The company received a government grant of 30% of its cost price at the time of its purchase. The terms of the grant are that if the company retains the asset for four years or more, then no repayment liability will be incurred. If the plant is sold within four years a repayment on a sliding scale would be applicable. The repayment is 75% if sold within the first year of purchase and this amount decreases by 25% per annum. Pinky and the Brain Ltd has no intention to sell the plant within the first four years. The company's accounting policy for capital based government grants is to treat them as deferred credits and release them to income over the life of the asset to which they relate. Required: a. Discuss whether the…
In 2021, the Marion Company purchased land containing a mineral mine for $1,740,000. Additional costs of $676,000 were incurred to develop the mine. Geologists estimated that 400,000 tons of ore would be extracted. After the ore is removed, the land will have a resale value of $116,000. To aid in the extraction, Marion built various structures and small storage buildings on the site at a cost of $184,000. These structures have a useful life of 10 years. The structures cannot be moved after the ore has been removed and will be left at the site. In addition, new equipment costing $96,000 was purchased and installed at the site. Marion does not plan to move the equipment to another site, but estimates that it can be sold at auction for $4,000 after the mining project is completed. In 2021, 60,000 tons of ore were extracted and sold. In 2022, the estimate of total tons of ore in the mine was revised from 400,000 to 451,000. During 2022, 96,000 tons were extracted. Required: 1. Compute…
In 2018, DAISY Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons of extractable mineral deposits. The estimated value of the property after the mineral has been removed is ₱800,000. Extraction activities began in 2019 and by the end of the year, 20,000 tons had been recovered and sold. In 2020, geological studies indicated that the total amount of mineral deposits had been underestimated by 60,000 tons. During 2020, 30,000 tons were extracted and 28,000 tons were sold. What is the depletion rate per ton in 2020? ₱ 20 ₱ 14 ₱ 12.73 ₱ 15.56