development costs amounted to P2,400,000. After extraction has occurred, SMR Coal Mining must restore the property (estimated present value of the obligation is P1,200,000), after which it can be sold for P3,400,000. The company estimates that 100,000 tons of coal can be extracted. If 18,000 tons were extracted during the first
development costs amounted to P2,400,000. After extraction has occurred, SMR Coal Mining must restore the property (estimated present value of the obligation is P1,200,000), after which it can be sold for P3,400,000. The company estimates that 100,000 tons of coal can be extracted. If 18,000 tons were extracted during the first
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 29CE
Related questions
Question
SMR Coal Mining acquires a property at a cost of P10,000,000. Intangible development costs amounted to P2,400,000. After extraction has occurred, SMR Coal Mining must restore the property (estimated present value of the obligation is P1,200,000), after which it can be sold for P3,400,000. The company estimates that 100,000 tons of coal can be extracted. If 18,000 tons were extracted during the first year, which of the following would be included in the entry to record the depletion? *
Debit to accumulated depletion for P1,836,000.
Debit to inventory for P1,836,000.
Credit to inventory for P1,800,000.
Credit to accumulated depletion for P3,060,000.
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
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning