Problem 28-8 (IAA)On January 1, 2020, Misnomer Company purchased land withvaluable natural ore deposits for P10,000,000. The residualvalue of the land was P2,000,000.At the time of purchase, a geological survey estimated arecoverable output of 4,000,000 tons.Early in 2020, roads were constructed on the land to aid inthe extraction and transportation of the mined ore at a costof P1,600,000. In 2020, 500,000 tons were mined and sold.A new survey at the end of 2021 estimated 4,200,000 tonsof ore available for mining. In 2021, 800,000 tons were minedand sold.What amount should be recognized as depletion for 2021?a. 1,344,000b. 1,920,000c. 1,200,000d. 1,600,000CS Scanned with CamScanner

calculation of depletion expenses for 2021 are as follows:

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What amount should be recognized as depletion for 2021? a. 1,344,000 b. 1,920,000 1,200,000 d. 1,600,000 с.

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Problem 28-8 (IAA)
On January 1, 2020, Misnomer Company purchased land with
valuable natural ore deposits for P10,000,000. The residual
value of the land was P2,000,000.
At the time of purchase, a geological survey estimated a
recoverable output of 4,000,000 tons.
Early in 2020, roads were constructed on the land to aid in
the extraction and transportation of the mined ore at a cost
of P1,600,000. In 2020, 500,000 tons were mined and sold.
A new survey at the end of 2021 estimated 4,200,000 tons
of ore available for mining. In 2021, 800,000 tons were mined
and sold.
What amount should be recognized as depletion for 2021?
a. 1,344,000
b. 1,920,000
c. 1,200,000
d. 1,600,000
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