Problem 28-11 (AICPA Adapted) On July 1, Lethargic 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. The entity expects to extract and sell 25,000 tons per month. The entity purchased new equipment on July 1. The equipment was purchased for P8,000,000 and had a useful lhfe of 4 years with no residual value. 1. What is the depletion for the current year? 1,200,000 b. 2,400,000 c. 1,950,000 d. 1,400,000 a.

Problem 28-11 (AICPA Adapted) On July 1, Lethargic 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. The entity expects to extract and sell 25,000 tons per month. The entity purchased new equipment on July 1. The equipment was purchased for P8,000,000 and had a useful lhfe of 4 years with no residual value. 1. What is the depletion for the current year? 1,200,000 b. 2,400,000 c. 1,950,000 d. 1,400,000 a.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

How much should be the carrying amount of the Equipment at December 31 of next year?

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Problem 28-11 (AICPA Adapted)
On Julx 1, Lethargic 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. The entity expects to
extract and sell 25,000 tons per month.
The entity purchased new equipment on July 1. The
equipment was purchased for P8,000,000 and had a useful
life of 4 years with no residual value.
1. What is the depletion for the current year?
a. 1,200,000
b. 2,400,000
c. 1,950,000
d. 1,400,000
2. What is the depreciation of the equipment for the current
year?
IX E

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