Problem 2 A natural resource property was purchased by Clouds Corporation for P5,000,000. The output was estimated to be 1,000,000 tons. Mining equipment was acquired at the cost of P8,000,000. The equipment has a useful life of 10 years but can exhaust the resource in six to eight years. Production is as follows: First year 200,000 tons Second year 250,000 tons Third year None Fourth year 100,000 tons Required: Compute the depletion and depreciation for each of the four years.

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Chapter1: Financial Statements And Business Decisions
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Problem 2
A natural resource property was purchased by Clouds Corporation for P5,000,000. The output was estimated to be
1,000,000 tons. Mining equipment was acquired at the cost of P8,000,000. The equipment has a useful life of 10 years but
can exhaust the resource in six to eight years. Production is as follows:
First year 200,000 tons
Second year 250,000 tons
Third year None
Fourth year 100,000 tons
Required:
Compute the depletion and depreciation for each of the four years.

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