Problem 4 Illusion Company purchased a tract of resource land in 2019 for P3,960,000. The content of the tract was estimated at 120,000 units. When the resource has been exhausted, it is estimated that the land will be worth P120,000. Building was set up at a cost of P960,000 and heavy equipment was purchased in early January 2019 for P1,240,000. The useful life of the building is 8 years and the useful life of the equipment is 4 years. In 2019, 12,000 units have been extracted. This was one half of the annual extraction which can be expected following the first year of operations. In 2020, 25,000 units were expected. Required: Prepare journal entries to record the transactions relating to the resource property for 2019 and 2020
Problem 4
Illusion Company purchased a tract of resource land in 2019 for P3,960,000. The content of the tract was estimated at
120,000 units. When the resource has been exhausted, it is estimated that the land will be worth P120,000.
Building was set up at a cost of P960,000 and heavy equipment was purchased in early January 2019 for P1,240,000. The
useful life of the building is 8 years and the useful life of the equipment is 4 years.
In 2019, 12,000 units have been extracted. This was one half of the annual extraction which can be expected following the
first year of operations. In 2020, 25,000 units were expected.
Required:
Prepare
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