an oil company that has recently established a refinery in the West Philippines Sea at an initialcost of Php 650,000,000 and an estimated 128,000,000 liters of oil on it. What will be the depletion charge duringthe year where the company has produced 80,000,000 liters of oil?
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an oil company that has recently established a refinery in the West Philippines Sea at an initialcost of Php 650,000,000 and an estimated 128,000,000 liters of oil on it. What will be the depletion charge duringthe year where the company has produced 80,000,000 liters of oil?
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- Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one million tons of ore within the mine. Gimli paid $23,100,000 for the rights and expects to harvest the ore over the next ten years. The following is the expected extraction for the next five years. Year 1: 50,000 tons Year 2: 90,000 tons Year 3: 100,000 tons Year 4: 110,000 tons Year 5: 130,000 tons Calculate the depletion expense for the next five years, and create the journal entry for year one.The Saudi Arabian Oil Refinery developed an oil at an initial cost of $ 50,000,000. What is the depletion charge during the year where it produces half million barrels of oil? Use unit or factor method in computing depletion. *written solution pleaseA certain mining company in Masbate has the 5 years record of its natural deposit extraction, 250,000 tons for the 1st year, 320,000 tons for the 2nd year, 360,000 tons for the 3rd year, 300,000 and 280,000 tons for the 4th and 5th year, respectively. The estimated natural deposit is about 5,000,000 tons and the company's initial cost is 120,000,000 million pesos. If the company had a gross income of 2,200 pesos per ton for the first 2 years, then 3,000 pesos per ton for the last 3 years. Determine: a.) The depletion charge for each year using the larger values for the 2 methods and b.) The percentage of the initial cost that has been written off in the 5 years.
- A coal company invests $10 million in a mine estimated to have 15 million tons of coal and no salvage value. It is expected that the mine will be in operation for 5 years. In the first year, 1140000 tons of coal are extracted and sold. What is the depletion expense for the first year?The Manila Gas Corporation is considering the purchase of a power trench digger for laying main extension on its distribution system. The machine costs Php138,000 with a salvage value of Php50,000 at the end of 10 years. Annual cost of maintenance, insurance and taxes is estimated at 12% of the first cost regardless of the amount the equipment is used. The operating costs consist of 2 men at Php30.00 a day each; fuel and lubrication, Php50 a day. The machine has a capacity of digging 25 meters deep per day. At present, trenches are excavated by hand labor. A laborer can dig ½ meter by 1.2 meters deep per day and receives Php12.00 per day. How long must be excavated each year to make this machine a good investment? Assume money is worth 12%. Use the sinking fund method of depreciation.The MGC Company has a contract with a hauler to transport its naptha requirements of 3,600,000 liter per year from a refinery in Batangas to its site in Paco at a cost of P1.05 per liter. It is proposed that the company buys a tanker with a capacity of 18,000 liters to service its requirements at a first cost of P 8,000,000 life is 6 years and a salvage value of P 800,000. Other expenses are as follows: a.) Diesel fuel at P7.95 per liter and the tanker consumers 120 liter per round trip from Paco to Batangas and back.b.) Lubricating oil servicing is P3,200 per month.c.) Labor including overtime and fringe benefits for one driver and one helper is P21,000 per month.d.) Annual taxes and insurance. 5% of first cost.e.) General maintenance per year is P40,000f.) Tires cost P 32,000 per set and will be renewed every 150 round trips. What should the MGC Company do if a 5% interest rate on investment is included in the analysis?
- The Platinum Touch Mining Company paid $4,000,000 for a parcel of land, including the mining rights. In addition, the company spent $564,700 to prepare the site for mining operations. When mining is completed, it is estimated that the residual value of the asset will be $800,000. Scientists estimate that the site contains 150,000 ounces of platinum. A. What is the average depletion cost per ounce? B. If 12,200 ounces were mined in the first year of operation, what is the amount of the depletion cost?1.During the month of August, a mining company has a gross income of P4,200,000 from the production of nickel. All expenses, excluding depletion expenses for this month, amount to P2,800,000. If the fixed depletion rate for nickel is 22%, what is the depletion allowance for this month? 2.To develop on oil well containing 5,000,000 barrels of oil required an initial investment of P40,000,000. In a certain year, 500,000 barrels of oil were produced from this well. Determine the depletion charge during the year. 3. a certain machine costs p40,000 and has a life of 4 years and salvage value of p5000. the production output of this machine in units per year for the first year; 1,800 units,2nd year 2,200 units; 3rd year; 3,000 units, 4th year 4,000 units. the units produced are of uniform quality. what is the annual depreciation charge?A high-tech material handling system was offered by a supplier to a large automobile manufacturer. The installation cost of the system is worth Php 1,000,300,000. This system will save Php 214,000,000 per year in manual labor, and it will incur Php 93,000,000 in annual operating and maintenance expenditures. The salvage value at the end of the system’s 10-year life is negligible. If the company’s hurdle rate (MARR) is 10% per year, should the system be recommended for implementation? Evaluate the system using linear interpolation of the Internal Rate of Return method.
- A high-tech material handling system was offered by a supplier to a large automobile manufacturer. The installation cost of the system is worth Php 1,000,300,000. This system will save Php 214,000,000 per year in manual labor, and it will incur Php 93,000,000 in annual operating and maintenance expenditures. The salvage value at the end of the system’s 10-year life is negligible. If the company’s hurdle rate (MARR) is 10% per year, should the system be recommended for implementation? Evaluate the system using spreadsheet solution of the Internal Rate of Return method.A large high-volume food manufacturing company is investing $146,680 to buy equipment for a new manufacturing line. In addition to the equipment costs, an additional $23,020 per year will be incurred to operate the manufacturing line. The salvage value of the equipment after 13 years is estimated to be 16.00% of the original cost. How much additional profit per year must the new manufacturing line create in order to recover the initial investment? MARR is 9.00% per year.An equipment in a factory has an initial cost of Php200,000. Its salvage value after ten years is Php20,000. As a percentage of the initial cost, what is the straight-line depreciation rate of the equipment?