At the beginning of current year. Huff Mining company purchased a mineral mine for P36,000,000 with removable 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 cost 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. b. c. d. 3,600,000 4,050,000 4,800,000 5,400,000 On July 1, 2016, Lam Company, a calendar year corporation, purchased the rights to a mine. The total price was P16,400,000 of which of P2,000,000 was allocable to the land. Estimated reserves were 1,800,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased new equipment on July 1, 2016 for P7,500,000. The equipment had a useful life of 8 years. However, after all the resource is removed, the equipment would be of no use and could be sold for P3,000,000. 1. What amount should be recorded as depletion for 2016? a. 1,200,000 b. 2,400,000 c. 1,366,000 d. 2,733,000 2. What amount should be recorded as depletion of the mining equipment for 2016? a. 450,000 b. 900,000 c. 600,000 d. 300,000 On January 1, 2015, Samar Company paid P5,400,000 for property containing natural resource of 2,000,000 tons of ore. The present value of the estimated cost of restoring the land after the resource extracted is P450,000. The land will have a value of P650,000 after it is restored for suitable use. Tunnels, bunk houses and other fixed installations are constructed at a cost of P8,000,000 and such expenditures are charged to mine improvements. Operations began in January 1,2016 and resources removed totaled 600,000 tons. During 2017, a discovery was made indicating that available resource after 2017 will total 1,875,000 tons. This study source was downloaded by 100000869004723 from CourseHero.com on 07-16-2023 08:49:31 GMT -05:00 https://www.coursehero.com/file/70087288/ANSWER-KEY-INTERM1-DEPLETIONdocx/ At the beginning of 2017, additional bunk houses were constructed in the amount of P770,000, in 2017, only 400,000 tons were mined because of a strike. 1. What amount should be recorded as depletion for 2016? a. 1,560,000 b. 1,755,000 c. 1,620,000 d. 1,425,000 2. What amount should be recorded as depletion for 2016? a. 1,560,000 b. 1,040,000 c. 640,000 d. 776,000 3. What amount should be recorded as depreciation for 2016? a. 2,400,000 b. 1,200,000 c. 1,000,000 d. 500,000 4. What amount should be recorded as depreciation for 2017? a. 1,120,000 b. 2,400,000 c. 1,600,000 d. 1,360,000 In 2015, Lepanto Mining Company purchased property with natural resources for P28,000,000. The property had a residual value of P500,0000. However, the entity is required to restore the property to the original condition at a discounted amount of P2,000,000 In 2015, the entity spent P1,000,000 in development cost and P3,000,000 in building on the property. The entity does not anticipate that the building will have utility after the natural resources are removed. In 2016, an amount of P1,000,000 was spent for additional development on the mine. The tonnage mined and estimated remaining tons for years 2015 to 2017 are as follows: Tons extracted Tons remaining 2015 0 10,000,000 2016 3,000,000 7,000,000 2017 3,500,000 2,500,000 1. What amount should be recognized as depletion for 2016? a. 6,900,000 b. 9,600,000 c. 8,100,000 This study source was downloaded by 100000869004723 from CourseHero.com on 07-16-2023 08:49:31 GMT -05:00 https://www.coursehero.com/file/70087288/ANSWER-KEY-INTERM1-DEPLETIONdocx/ d. 8,400,000 2. What amount should be recognized as depletion for 2017? a. 10,150,000 b. 11,025,000 c. 15,750,000 d. 9,450,000 ABC Company provided the following balances at the end of the current year: Wasting asset, at cost 80,000,000 Accumulated depletion 20,000,000 Capital liquidated 15,000,000 Retained earnings 10,000,000 Depletion based on 10,000 units extracted at P50 per unit 5,000,000 Inventory resource deposit (20,000 units) 2,000,000 What is the maximum dividend that can be declared at the end of the current year? a. b. c. d. 14,000 30,000 10,000 15,000 This study source was downloaded by 100000869004723 from CourseHero.com on 07-16-2023 08:49:31 GMT -05:00 https://www.coursehero.com/file/70087288/ANSWER-KEY-INTERM1-DEPLETIONdocx/ Powered by TCPDF (www.tcpdf.org)
