Problem 28-10 (IAA)Radical Company acquired a mineral right for P30,000,000 inJanuary 2020. The mine has a recoverable ore estimated at4,000,000 tons.After it has extracted all the ore, the entity will be required bylaw to restore the land to the original condition at a discountedamount of P2,000,000. The entity believed that the propertycan be sold afterwards for P5,000,000.Early in 2020, roads were constructed and other developmentcosts were incurred to aid in the extraction and transportationof the mined ore at a cost of P6,000,000. In 2020, 200,000 tons ofore were mined and sold.On December 31, 2021 a new survey made by a new miningengineer indicated that 5,000,000 tons of ore were available formining. In 2021, 225,000 tons of ore were extracted and sold.What depletion expense should be recognized for 2021?a. 1,650,000b. 1,350,000C, 1,856,250d. 1,410,000

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Answered: depletion expense should be recognized…

Business

Accounting

depletion expense should be recognized for 2021? 550,000

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion

Section: Chapter Questions

Problem 29CE

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The following intangible assets were purchased by Goldstein Corporation: A. A patent with a remaining legal life of twelve years is bought, and Goldstein expects to be able to use it for seven years. B. A copyright with a remaining life of thirty years is purchased, and Goldstein expects to be able to use it for ten years. For each of these situations, determine the useful life over which Goldstein will amortize the intangible assets.
16.Entity D acquired a property in 2021 which contains mineral deposit. The acquisition cost of the property was P20,000,000. After acquisition, the following costs were incurred: Exploration cost P13,000,000; Development cost related to drilling wells P10,000,000; Development cost related to production equipment P15,000,000. For P2,000,000, the entity is legally required to restore the land to a condition appropriate for resale. It is estimated that the property can be sold for P5,000,000 following mineral extraction. Geological estimates indicate that 5,000,000 tons of mineral may be extracted. The entity extracted 600,000 tons of the mineral in 2021 and sold 450,000 tons. How much is the depletion included in the entity's inventory at Dec 31, 2021?
In January 2020, Mark Company purchased a mineral mine for P36,000,000 with removable ore estimated by geological survey at 4,000,000 tons. The property has an estimated value of P3,600,000 after the ore has been extracted. The entity incurred P10,800,000 of development cost preparing the property for the extraction of ore. The entity is required to restore the property to the original condition at an estimated cost of P2,500,000. The present value of the estimated restoration cost is P1,800,000. During 2020, 400,000 tons were removed, and 300,000 tons were sold. For the year ended December 31, 2020, what amount of depletion should be included in cost of goods sold? 3,375,000 O 4,570,000 3,427,500 O 4,500,000
At the beginning of the current year, JKL Company purchased a mineral mine for P26,400,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, the entity will be required by law to restore the land to its original condition at an estimated cost of P2,100,000. The present value of the estimated restoration cost is P1,800,000. The entity believed that it will be able to sell the property afterwards for P3,000,000. During the current year, the entity incurred P3,600,000 of development cost preparing the mine for production, removed 80,000 tons of ore and sold 60,000 tons. Determine the total amount of depletion should be recorded for the current year. 1,920,000 b. 1,440,000 c. 1,940,000 d. 1,455,000
On January 1, 2021, Annie Company purchased a mineral mine for P26,400,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, the entity will be required by law to restore the land to its original condition at an estimated cost of P2,200,000. The present value of the estimated restoration cost is P1,800,000. The property can be sold afterwards for P3,000,000. During 2021, the entity incurred P2,000,000 exploration cost and P1,600,000 development cost preparing the mine for production. The entity removed 80,000 tons of ore and sold 60,000 tons of ore in 2021. What amount of depletion should be included in cost of sales for 2021?
On January 1, 2022, Annie Company purchased a mineral mine for P26,400,000 with removable ore estimated at 1,200,000 tons. After it has all the ore, the entity will be required by law to restore the land to its original condition at an estimated cost of P2,200,000. The present value of the estimated restoration cost is P1,800,000. The property can be sold afterwards for P3,000,000. During 2021, the entity incurred P2,000,000 exploration cost and P1,600,000 development cost preparing the mine for production. The entity removed 80,000 tons of ore and sold 60,000 tons of ore in 2022. What amount of depletion should be included in the cost of sales for 2022? А. 1,920,000 B. 1,440,000 С. 1,500,000 D. 1,590,000
On January 1, 2020, Hilary Company purchased a mineral mine for P26,400,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, the entity will be required by law to restore the land to the original condition at an estimated cost of P2,200,000. The present value of the estimated restoration cost is P1,800,000. The property can be sold afterwards for P3,000,000. During 2020, the entity incurred P2,000,000 exploration cost and P1,600,000 development cost preparing the mine for productions. The entity removed 80,000 tons of ore and sold 60,000 tons of ore in the current year. What amount of depletion should be included in cost of sales for the current year? 1,920,000 1,440,000 1,455,000 1,940,000 What is the depletion for the current year? 1,920,000 1,440,000 1,940,000 1,455,000
• Hall, Inc. purchases an asset for $3,000,000. As of December 31, 2021, the Accumulated Depreciation on the asset is $1,200,000. Based on technological changes, Hall decides to test the asset for impairment. Estimated undiscounted future cash flows from the project are $1,500,000. The Fair Value of the asset is estimated at $982,288. The journal entry related to this asset will include: Credit to Accumulated Depreciation of $300,000. O Debit to Loss of $817,712. O Debit to Loss of $851,444. O No impairment necessary.
On July 1, 2022, Trisha Company purchased the rights to a mine for P13,200,000, of which P1,200,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased mining equipment on July 1, 2022 for P9,500,000. The mining equipment had a useful life of 8 years. However, after all the resource is removed, the equipment will be of no use and will be sold for P500,000. 1. What is the depletion for 2022? A. 2,400,000 B. 1,200,000 C. 2,640,000 D. 1,320,000 2. What is the depreciation for 2022? A. 1,800,000 B. 1,125,000 C. 900,000 D. 562,500
Problem 28-9 (AICPA Adapted) purchased a mineral mine for P36,000,000 with removable At the beginning of current year, Handsome Company ore estimated by geological survey at 2,160,000 tons. The property has an estimated value of P3,600,000 after the ore has been extracted. The entity incurred P10,800,000- of development costs preparing the property for the extraction of ore. During the current year, 270,000 tons were removed and 240,000 tons were sold. What amount of depletion should be included in cost of goods sold for the current year? a. 3,600,000 b. 4,050,000 c. 4,800,000 d. 5,400,000
17. The entity incurred the following in exploring a natural resources on January 1,2021Acquisition cost of the land P10,000,000Development cost 5,000,000Exploration cost 6,000,000Purchase of equipment 3,000,000The entity expects to mine a total of 5,000,000 tons of natural gas, it is also estimated that 1,000,000 of natural gas will be extracted every year. The useful life of the equipment is 6 years, the equipment is used over a several project not just in that specific natural resources. On 2021 the entity extracted 1,500,000 tons of natural gas. How much is the depletion for the year 2021?
Maxine Ltd acquired a mining property in Victoria, called Clarity for $13 million on 1 July 2018 and treated it as an area of interest. Maxine Ltd incurred the costs as below: Year Details $ Amount August 2018 Right to explore 450,000 2018 – 2019 Exploratory study and drilling 3,200,000 At the beginning of calendar year 2019, the technical feasibility and commercial viability of mining the diamond deposit were confirmed. The company's experts estimated that there were 10 million carats of diamonds could be commercially exploited. From March 2019 to June 2019, the company undertook the following capital investments: Costs Estimated Life (as at 30 June 2019) Mine buildings $4,600,000 20 years Processing plant $2,700,000 5 years Other equipment $3,010,000 14 years Mine buildings cannot be economically removed from the mine location, but the processing plant and other equipment can be economically removed and have alternative uses. On 30 June 2019, Maxine Ltd estimated that the costs of…