Gomez Corporation purchased land for P 6,000,000. The company expected to extract 1,000,000 tons of mine from this land over the next 20 years at which time, the residual value will be zero. During the first 2 years of the mine’s operations,30,000 tons were mined each year and sold for P 80 per ton. The estimate of the total lifetime capacity of the mine was raise to 1,200,000 tons at the start of the 3rd year and the residual value was estimated to be P 480,000. During the third year, 50,000 tons were mined and sold for P 85 per ton. How much would be the depletion for the third year? a. 215,000 c. 225,000 b. 227,500 d. 235,000
Gomez Corporation purchased land for P 6,000,000. The company expected to extract 1,000,000 tons of mine from this land over the next 20 years at which time, the residual value will be zero. During the first 2 years of the mine’s operations,30,000 tons were mined each year and sold for P 80 per ton. The estimate of the total lifetime capacity of the mine was raise to 1,200,000 tons at the start of the 3rd year and the residual value was estimated to be P 480,000. During the third year, 50,000 tons were mined and sold for P 85 per ton. How much would be the depletion for the third year? a. 215,000 c. 225,000 b. 227,500 d. 235,000
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 29CE
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Gomez Corporation purchased land for P 6,000,000. The company expected to extract 1,000,000 tons
of mine from this land over the next 20 years at which time, the residual value will be zero. During the
first 2 years of the mine’s operations,30,000 tons were mined each year and sold for P 80 per ton. The
estimate of the total lifetime capacity of the mine was raise to 1,200,000 tons at the start of the 3rd year
and the residual value was estimated to be P 480,000. During the third year, 50,000 tons were mined
and sold for P 85 per ton. How much would be the depletion for the third year?
a. 215,000 c. 225,000
b. 227,500 d. 235,000
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