Reliable Company purchase a tract of resource land in 2017 for P3,960, 000. The content of the tract was estimated at 120,000 units. When the resource had been exhausted, it is estimated that the land will be worth P120,000. Building was set up at cost of P960,000 and heavy equipment was purchase in early January 2017 for P1,240,000. The life of the plant assets is as follows: Building 8 years; Equipment 4 years In 2017, 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 20018,additional intangible development cost of 324,000 was incurred and 25,000 units were extracted. a. How much is the depletion charge in 2018? b. How much is the depreciation charge in 2018?
Reliable Company purchase a tract of resource land in 2017 for P3,960, 000. The content of the tract was estimated at 120,000 units. When the resource had been exhausted, it is estimated that the land will be worth P120,000. Building was set up at cost of P960,000 and heavy equipment was purchase in early January 2017 for P1,240,000. The life of the plant assets is as follows: Building 8 years; Equipment 4 years In 2017, 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 20018,additional intangible development cost of 324,000 was incurred and 25,000 units were extracted. a. How much is the depletion charge in 2018? b. How much is the depreciation charge in 2018?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
The answer for this is a.) 875,000
b.) 510,000 how to get this answers? Please show the solution.
Transcribed Image Text:Reliable Company purchase a tract of resource land in 2017 for
P3,960, 000. The content of the tract was estimated at 120,000
units. When the resource had been exhausted, it is estimated that the
land will be worth P120,000.
Building was set up at cost of P960,000 and heavy equipment was
purchase in early January 2017 for P1,240,000. The life of the plant
assets is as follows: Building 8 years; Equipment 4 years
In 2017, 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 2018,additional intangible development cost of
324,000 was incurred and 25,000 units were extracted.
a. How much is the depletion charge in 2018?
b. How much is the depreciation charge in 2018?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education