Use the following information for the next two questions: In 20x1, BUCOLIC RURAL Co. acquired land for a total cost of P40,000,000 to be used to quarry marble, limestone, and construction aggregates. Costs incurred to obtain legal right to explore the property amounted to P8,000,000. Expenditures incurred in the exploration for and evaluation of mineral resources before technical feasibility and commercial viability of extracting a mineral resource are demonstrable totaled P12,000,000. Intangible development costs of drilling, tunnels, shafts, and wells before the actual production totaled P20,000,000. BUCOLIC Co. estimates that total recoverable reserves are 100,000,000 units. Furthermore, BUCOLIC Co. expects to sell the land for P4,800,000 after resource is depleted. However, no buyer will pay this price unless the mine is drained, f i lled and leveled, a process that will cost PS00,000. It is BUCOLIC's policy to capitalize all exploration costs. Actual units quarried in 20x1 through 20x4 totaled 30,000,000 units. On January 1, 20x5, BUCOLIC Co. estimated that the remaining recoverable reserves are only 25,000,000 units and after the reserves are exhausted, the land will be sold for P3,200,000. Costs of disposal are estimated at P1,200,000. Actual units quarried in 20x5 totaled 6,000,000 units. ow much is the depletion charge in 20x5? /hat is the carrying amount of the wasting asset on December 31, 20x5?
Use the following information for the next two questions: In 20x1, BUCOLIC RURAL Co. acquired land for a total cost of P40,000,000 to be used to quarry marble, limestone, and construction aggregates. Costs incurred to obtain legal right to explore the property amounted to P8,000,000. Expenditures incurred in the exploration for and evaluation of mineral resources before technical feasibility and commercial viability of extracting a mineral resource are demonstrable totaled P12,000,000. Intangible development costs of drilling, tunnels, shafts, and wells before the actual production totaled P20,000,000. BUCOLIC Co. estimates that total recoverable reserves are 100,000,000 units. Furthermore, BUCOLIC Co. expects to sell the land for P4,800,000 after resource is depleted. However, no buyer will pay this price unless the mine is drained, f i lled and leveled, a process that will cost PS00,000. It is BUCOLIC's policy to capitalize all exploration costs. Actual units quarried in 20x1 through 20x4 totaled 30,000,000 units. On January 1, 20x5, BUCOLIC Co. estimated that the remaining recoverable reserves are only 25,000,000 units and after the reserves are exhausted, the land will be sold for P3,200,000. Costs of disposal are estimated at P1,200,000. Actual units quarried in 20x5 totaled 6,000,000 units. ow much is the depletion charge in 20x5? /hat is the carrying amount of the wasting asset on December 31, 20x5?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Use the following information for the next two questions:
In 20x1, BUCOLIC RURAL Co. acquired land for a total cost of P40,000,000 to be used to quarry
marble, limestone, and construction aggregates. Costs incurred to obtain legal right to explore the
property amounted to P8,000,000. Expenditures incurred in the exploration for and evaluation of
mineral resources before technical feasibility and commercial viability of extracting a mineral
resource are demonstrable totaled P12,000,000. Intangible development costs of drilling, tunnels,
shafts, and wells before the actual production totaled P20,000,000. BUCOLIC Co. estimates that total
recoverable reserves are 100,000,000 units. Furthermore, BUCOLIC Co. expects to sell the land for
P4,800,000 after resource is depleted. However, no buyer will pay this price unless the mine is
drained, f i lled and leveled, a process that will cost P800,000. It is BUCOLIC's policy to capitalize all
exploration costs.
Actual units quarried in 20x1 through 20x4 totaled 30,000,000 units. On January 1, 20x5, BUCOLIC
Co. estimated that the remaining recoverable reserves are only 25,000,000 units and after the reserves
are exhausted, the land will be sold for P3,200,000. Costs of disposal are estimated at P1,200,000.
Actual units quarried in 20x5 totaled 6,000,000 units.
How much is the depletion charge in 20x5?
What is the carrying amount of the wasting asset on December 31, 20x5?
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