In 2018, Sunflower Company acquired a silver mine inEastern Mindanao. Because the mine is located deep in thehave any residual value.2. Compute the depreciation for 2021 and 2022.Mindanao frontier, Sunflower Company was able to acquirethe mine for the low price of P50,000.Problem 30-6 (IAA)In 2019, Sunflower Company constructed a road to the silvermine costing P5,000,000. Improvements and otherdevelopment costs made in 2019 cost P750,000.Because of the improvements to the mine and to thesurrounding land, it is estimated that the mine can be soldfor P600,000 when mining activities are complete.During 2020, five buildings were constructed near the minesite to house the mine workers and their families.The total cost of the five buildings was P2,000,000. Estimatedresidual value is P200,000.In 2021, geologists estimated that 4,000,000 tons of silver orecould be removed from the mine for refining.During 2021, the first year of operations, only 500,000 tonsof silver ore were removed from the mine.However, in 2022, workers mined 1,000,000 tons of silver.During that same year, geologists discovered that the minecontained 3,000,000 tons of silver ore in addition to theoriginal 4,000,000 tons.Additional development costs of P1,300,000 were made tothe mine early in 2022 to facilitate the removal of theadditional silver.Early in 2022, an additional building was constructed at acost of P375,000 to house the additional workers needed toexcavate the added silver. This building is not expected toRequired:* Compute the depletion for 2021 and 2022.Compute the depreciation for 2021 and 2022.

Depreciation continues to spread the cost of a tangible item over its useful life, depletion…

Answered: the mine for the low price of P50,000.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Required information [The following information applies to the questions displayed below.] Montego Production Company is considering an investment in new machinery for its factory. Various information about the proposed investment follows: Initial investment Useful life Salvage value Annual net income generated Montego's cost of capital Assume straight line depreciation method is used. Help Montego evaluate this project by calculating each of the following: $ 860,000 6 years Net Present Value $ 20,000 $ 66,000 11% Required: 4. Recalculate Montego's NPV assuming its cost of capital is 12 percent. (Future Value of $1, Present Value of $1. Future Value Annuity of $1, Present Value Annuity of $1.) Note: Use appropriate factor(s) from the tables provided. Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.
QUESTION 5 Use the information provided below to answer the following questions. Where applicable, use the present value tables provided in APPENDICES 1 and 2 that appear after QUESTION 5. 5.1 5.2 5.3 5.4 5.5 Calculate the Payback Period of both machines (expressed in years, months and days.) Which machine should be chosen on the basis of payback period only? Why? Calculate the Accounting Rate of Return (on average investment) of Machine A (expressed to two decimal places). Calculate the Net Present Value of each machine (amounts expressed to the nearest Rand.) Calculate the Internal Rate of Return of Machine B (expressed to two decimal places) using interpolation.
Net Present Value—Unequal Lives Bunker Hill Mining Company has two competing proposals: a processing mill and an electric shovel. Both pieces of equipment have an initial investment of $695,302. The net cash flows estimated for the two proposals are as follows: Net Cash Flow Year Processing Mill Electric Shovel 1 $221,000 $276,000 2 197,000 256,000 3 197,000 236,000 4 157,000 243,000 5 119,000 6 99,000 7 86,000 8 86,000 The estimated residual value of the processing mill at the end of Year 4 is $280,000. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627…
V1. A mining company using a 17% MARR is evaluating a new site for nickel mining. The site acquisition and equipment expenses are expected to cost P485M. Net annual receipts are estimated at P95M for the next 12 years after which the mine will be depleted. Clean up and biodiversity restoration is anticipated to cost P18M per year for the succeeding three years. Assess this venture using the ERR method. (ANSWER: 16.72%)
Determine the difference between the capitalized cost of the timber and steel penstock for a hydroelectric plant with interest of 10%: Timber Steel First Cost Php50,000 Php80,000 Estimated Life 10 years 30 years Scrap Value Php2,000 None Annual Maintenance Php1,200 Php200 Show calculations for the capitalized cost of each item separately.
The following table summarizes the financial data for a proposed new asset. The issue is how long the asset should be kept. Assume an interest rate of 12% and delermine the economic service life of the anset. End of YearN) Investment cost O&M Cost Salvage value $14,000 $3.400 $8.000 $4600 $6.000 $5.800 $4,000 01 year O2 years 3 years O Not enough information
Perit Industries has $155,000 to invest in one of the following two projects: Cost of equipment required Working capital investment required Annual cash inflows Salvage value of equipment in six years Life of the project Project A $ 155,000 $ 25,000 $ 8,600 6 1. Net present value project A 2. Net present value project B 3. Which investment alternative (if either) would you recommend that the company accept? X Answer is complete but not entirely correct. Project B $0 $ 155,000 $ 40,000 years The working capital needed for project B will be released at the end of six years for investment elsewhere. Perit Industries' discount rate is 14%. Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables. Required: 1. Compute the net present value of Project A. Note: Enter negative values with a minus sign. Round your final answer to the nearest whole dollar amount. 2. Compute the net present value of Project B. $(53,971) 70,527 X Project B $0…
Required information A land development company is considering the purchase of earth-moving equipment. This equipment will have an estimated first cost of $163,000, a salvage value of $55,000, a life of 10 years, a maintenance cost of $32,000 per year, and an operating cost of $220 per day. Alternatively, the company can rent the necessary equipment for $1010 per day and hire a driver at $180 per day. When approached to rent for the breakeven number of days, the equipment owner indicated that the minimum rental is for 100 days per year; however, he might consider a lower daily rental cost. What is the daily rental cost to justify renting over purchasing? If the equipment was purchased, assume it would be used for the breakeven number of days. Determine the required rental cost per day. The daily rental cost to justify renting over purchasing is determined to be $
Week 8Gem Limited commences operations on 1 January 2019. During 2019 Gem Limited explores threeareas and incurs the following costs:Exploration and Evaluation expenditure ($)Desirable 25,000,000Undesirable 20,000,000Neutral 28,000,000In 2020 oil is discovered at Desirable Site. Undesirable Site is abandoned. Neutral Site has not yet reacha stage that permits a reasonable assessment at the existence or otherwise of economicallyrecoverable reserves, and active and significant operations in the area of interest are continuing. Inrelation to the exploration and evaluation expenditures incurred at Desirable Site and Neutral Site, 70percent of the expenditures related to property, plant and equipment, and the balance relates tointangible assets.In 2020, development costs of $48,000,000 are incurred at Desirable Site (to be written off on aproduction basis). $32,000,000 of this expenditure relates to property, plant and equipment, and thebalance relates to intangible assets. The development…
A company has purchased a machine (CCA rate 24%) at $300,000 and has a tax rate of 33.00%. By how much will the NPV change if the company is able to obtain a $13,000 salvage value for its machine at the end of the project's life in Year 4? Assume a discount rate of 11.20% and that all else remains the same. Question 10Answer a. $8,502 b. $10,415 c. -$1,913 d. $6,589 e. $10,075
Problem 5: Platypus Corporation's managers have presented the company's management with two proposals for expanding its production capacity. Based on the following two different alternatives, which proposal should they adopt? Cost of the Equipment Required Project 1 $250,000 Working Capital Investment Required 0 Annual Cash Inflows $65,000 Maintenance cost in year 4 $15,000 Maintenance cost in year 6 0 Salvage Value of Equipment in 8 Years $12,000 Project 2 $100,000 $150,000 $50,000 0 $15,000 0 Both projects have a life of 8 years. In 8 years Project 2's working capital will be released and be available to invest in other projects. The company has a discount rate of 16% Required: 1) Calculate the net present value for each project. 2) Based solely on the net present value of the project, which alternative would you recommend the company invest in? Why?
(Multiple Choice Question) Glen Company owns a truck that is expected to be driven for 300,000 km over its useful life. The cost of the truck was $55,000, and it is expected to have a residual value of $0. In 2019, the truck was driven 22,000 km. How much does the truck amortize in 2019? 1. $5.45 2. None of the answers are correct 3. 120,000 km 4. $120,000 5. $4033.33

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

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,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

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

SEE MORE TEXTBOOKS