Radical Company acquired a mineral right for P30,000,000 January 2020. The mine has a recoverable ore estimated 1,000,000 tons. After it has extracted all the ore, the entity will be required aw to restore the land to the original condition at a discoun amount of P2,000,000. The entity believed that the prope can be sold afterwards for P5,000,000.

Q: • Hall, Inc. purchases an asset for $3,000,000. As of December 31, 2021, the Accumulated…

A: From the given information, The asset’s carrying cost = $3,000,000 - $1,200,000 = $1,800,000…

Q: At the beginning of 2020, Monty Company acquired a mine for $2,507,200. Of this amount, $119,000 was…

A: Depletion is used to allocate the costs of extraction of natural resources. These resources include…

Q: ill Company acquired a patent on an oil fe and no residual value. Sandhill uses st ted from the…

A: A patent gives the holder the authority to sue anybody who makes, uses, imports, or sells the…

Q: Larkspur Mining Company purchased land on February 1, 2025, at a cost of $1,031,100. It estimated…

A: Cost of depletion refers to those costs that are incurred in the process of extracting various…

Q: On Jan 1, 20X1 ABC Mining Co. purchased a mine for P2,640,000 with removable ore estimated at…

A: Depletion is the reduction in the value of natural resources due to extraction. In accounting, this…

Q: PT Adista owns land that was purchased in cash on January 2, 2018 at a cost of IDR 1,000,000,000.…

A: There are two methods for subsequent accounting of the fixed assets; which are, Cost model and the…

Q: On July 1,2021, Phantom Corporation purchased the rights to a mine for a total purchase price of…

A: Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…

Q: Mack Company acquired property for $20,000,000 containing platinum ore mine on January 1, 2019. Mack…

A: Balance in accounting refers to the equality of total debits and total credits in an account or…

Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.