In 2020, Tableta Company paid P4,000,000 to purchase a land containing a total estimated 160,000 tons of extractable mineral deposits. The estimated value of the property after the mineral has been removed is P800,000. Extraction activities began in
Q: On January 1, 2018, Nickel Co. purchased a land for P12,000,000. The company expected to extract…
A: Year 2018 Purchase price of land = P12,000,000 Expected minerals to be extracted = 2,000,000…
Q: e Fairy Company purchased a site for limestone quarry for P 100,000 on January 2,2020. It estimates…
A: a) The depletion cost per ton. Cost of quarry = P100,000 Asset retirement obligation value =…
Q: In March, 2020, Sunland Company purchased a coal mine for $8110000. Removable coal is estimated at…
A: Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…
Q: n 2018, IRIS Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons of…
A: Given information: Purchase price = ₱4,000,000 Total estimated tons = 160,000 Salvage value =…
Q: In 2018, IRIS Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons of…
A: Given in the question: Value of land at beginning 2018 = ₱4,000,000 Salvage value = ₱800,000 Total…
Q: in 2020, ABC Company paid P4,000,000 to purchase land containing a total estimated 160,000 tons of…
A: Depletion refers to the allocation or expense of extracting natural resources from the surface of…
Q: On April 17, 2021, the Loadstone Mining Company purchased the rights to a coal mine. The purchase…
A: DepletionDepletion is an accrual accounting technique used to allocate the cost of extracting…
Q: In 2018, IRIS Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons of…
A: a) Depletion Expenses to charge to Cost of Sales in 2020: Year 2019: Cost of the land: ₱4,000,000…
Q: On January 1, 2020, Nishinoya Company purchased a mineral mine for P26,400,000 with removable ore…
A: Depreciation , amortization , depletion all means the fall in value of assets due to one reason or…
Q: On January 1, 2020, Sapphire Mining Company purchased land with valuable natural ore deposits for…
A: The depletion expense refers to the decrease in the value of the natural resource used in the…
Q: 6. On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which…
A: Depletion is charged in books in order to record reduction in value of natural resources over the…
Q: At the beginning of the current year, Bert Company purchased a mineral mine for P26,400,000 with…
A: Lets understand the basics. Depletion needs to calculate when there is extraction of mineral…
Q: On January 2020, Mina Company paid the national government a fee in the amount of P129,000,000 for…
A: Government Fees P12,90,00,000 Present value of restoration cost (P10000000 * 0.385) P38,50,000…
Q: 3. On January 2, 2020, the Wally Company purchased land for P 450,000, from which it is estimated…
A: Natural resources: Resources that occur from nature are called natural resources. It is not…
Q: At the beginning of 2020, Aristotle Company acquired a mine for $970,000. Of this amount, $100,000…
A: Depletion refers to a non cash expense where the cost of natural resources such as oil, gas and…
Q: In 2021, the Marion Company purchased land containing a mineral mine for $1,600,000. Additional…
A: Calculate the depletion of mine for the year 2021 and 2022 as follows: 1. Calculate depletion for…
Q: On July 1, 2021, Lambda Company, a calendar year entity purchased the rights to a mine. The total…
A: Cost of right = P14,000,000 - P2,000,000 = P12,000,000 Reserves used during the year = 25,000 tons x…
Q: In 2020, Tableta Company paid P4,000,000 to purchase a land containing a total estimated 160,000…
A: Under straight line method, Depreciation expense for equipment can be calculated as: = (Cost -…
Q: On June 1, 2021, ABC Company purchased rights to a mine for P30,000,000, of which, P3,000,000 was…
A: Cost of mine = Total purchase value - Amount allocable to land = 30000000 - 3000000 = 27,000,000
Q: On July 1,2021, Phantom Corporation purchased the rights to a mine for a total purchase price of…
A: The depreciation expense is charged on fixed assets as reduction in the value of fixed assets with…
Q: On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000…
A: Depreciation is charged to record reduction in value of asset over the period of time.
Q: On January 1, 2020 Universal Company paid P5,400,000 for property containing natural resource of…
A: Wasting assets refers to the resources containing oil, natural gas, ores, mines quarry etc. In these…
Q: On January 2, 2019, Whistler Company purchased land for $450,000, from which it is estimated that…
A: Depletion base includes Purchase cost development cost PV of anticipated restoration cost less:…
Q: On January 1, 2018, Lam Company, a calendar year corporation, purchased the rights to a mine. The…
A: Compute the mine value as follows: Mine for depletion=Total purchase price-Allocation to…
Q: On January 2, 2019, Whistler Company purchased land for $450,000, from which it is estimated that…
A: Depletion in accounting refers to the technique used in allocating or assigning the cost of…
Q: Sunny Company paid 4,000,000 for property containing natural resources of 2,500,000 tons of ore. The…
A: Natural resources are gifts of nature without which survival is impossible. In order to fulfill the…
Q: In 2018, IRIS Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons of…
A: The questions are multiple choice questions Required Choose the Correct Option.
Q: On June 1, 2021, ABC Company purchased rights to a mine for P30,000,000, of which, P3,000,000 was…
A: Annual Depreciation (straight line method) = (Cost of the assets - Residual value) / Expected life…
Q: On July 4, 2020, Wyoming Mining Company purchased the mineral rights to a granite deposit for…
A: Assets used over the years will face a depreciation each year which refers to the reduction in the…
Q: On January 1, 2021, a business paid $6.400,000 for land with mineral deposits. Over the following…
A: The process of defining, assessing, and reporting transactions to regulatory authorities, tax…
Q: Questions: What is the depletion for 2020? * What is the depreciation for 2020? *
A: Tangible assets are depreciated where as intangible assets/ rights are depleted over the useful…
Q: eight years. However, after all the resources are removed, the equipment will be of no use and will…
A: Depreciatioin is charged to record reductiion in value of asset over the period of time.…
Q: How much is the computed depletion rate in 2021? How much is the depletion in 2022? How much is…
A: Unit Depletion rate = (Cost - Residual Value)/Expected Resource
Q: A company purchased land containing mineral deposits for $6,400,000 on January 1, 2021. The company…
A: The answer is stated below:
Q: In 20x1, Newman Company paid P1,000,000 to purchase land containing a total estimated 160,000 tons…
A: Solution: Total cost of land= P1,000,000. Estimated value after mineral have been removed= P200,000…
Q: OH Corporation in 2017 paid ₱24,096,560 for a property with natural resources estimated at 1,025,600…
A: The depletion expense is charged on natural resources as reduction in value with the passage of…
Q: how much should the company include as depletion in its cost of goods sold? * 1,440,000
A: The cost incurred in producing the goods sold, such as direct cost, is known as the cost of goods…
Q: On May, 1, 2020, Star Mines Inc. purchased an ore mine for $2,400,000 to access an estimated…
A: Solution: The ore mine should be recorded at = Purchase cost of mine + Development cost + Present…
Q: In 2018, IRIS Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons of…
A: Given information: Cost = ₱4,000,000 Residual value = ₱800,000 Expected tons to be extracted =…
Q: On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000…
A: Answer 1) Given: Depletion base =₱13,200,000-₱1,200,000=₱12000000Salvage value =0
Q: In 2018, DAISY Company paid ₱4,000,000 to purchase land containing a total estimated 160,000 tons of…
A: Formula: Depletion per Ton = ( Cost of land - salvage value ) / Estimated tons
Q: On January 1, 2018, Spring Co. purchased a land for $12,000,000. The company expected to extract…
A:
Q: On January 1, 2018, Nickel Co. purchased a land for P12,000,000. The company expected to extract…
A: Cost of land = $12,000,000 Expected extraction = 2,000,000 Time = 20 years Capacity raised =…
Q: In January, 2020, Swifty Corporation purchased a mineral mine for $4800000 with removable ore…
A: The company will use the assets for many years. Since the assets are used for many years in the…
Q: n July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000…
A: Solutions: 1) Depletion is charged in books in order to record reduction in value of natural…
Q: 7. On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which…
A: Depreciation is charged to record reduction in value of asset over the period of time.
Q: on July 1, 2022, Trisha Company purchased the rights to a mine for P13,200,000, of which P1,200,000…
A: The depreciation expense is charged on tangible assets of the business, the depletion is charged on…
Q: During 2021, Bondoc Corporation acquired a mineral mine for P900,000 of which P150,000 was ascribed…
A: Depletion of mine will be on the basis of amount of mineral extracted during the period. Accumulated…
Q: During 2020, ABC Company acquired a mineral mine for P1,500,000 of which P200,000 was ascribed to…
A: Formula: Total Depletion amount = Depletion per unit x Total extracted units.
Q: On July 1, 2020, FREESIA Company purchased the rights to a mine for ₱13,200,000, of which ₱1,200,000…
A: Depletion is charged in books in order to record reduction in value of natural resources over the…
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- The following intangible assets were purchased by Hanna Unlimited: A. A patent with a remaining legal life of twelve years is bought, and Hanna expects to be able to use it for six years. It is purchased at a cost of $48,000. B. A copyright with a remaining life of thirty years is purchased, and Hanna expects to be able to use it for ten years. It is purchased for $70,000. Determine the annual amortization amount for each intangible asset.Comprehensive: Acquisition, Subsequent Expenditures, and Depreciation On January 2, 2019, Lapar Corporation purchased a machine for 50,000. Lapar paid shipping expenses of 500, as well as installation costs of 1,200. The company estimated that the machine would have a useful life of 10 years and a residual value of 3,000. On January 1, 2020, Lapar made additions costing 3,600 to the machine in order to comply with pollution-control ordinances. These additions neither prolonged the life of the machine nor increased the residual value. Required: 1. If Lapar records depreciation expense under the straight-line method, how much is the depreciation expense for 2020? 2. Assume Lapar determines the machine has three significant components as shown below. If Lapar uses IFRS, what is the amount of depreciation expense that would be recorded?For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a seventeen-year remaining legal life was purchased for $850,000. The patent will be usable for another six years. B. A patent was acquired on a new tablet. The cost of the patent itself was only $12,000, but the market value of the patent is $150,000. The company expects to be able to use this patent for all twenty years of its life.
- For each of the following unrelated situations, calculate the annual amortization expense and prepare a journal entry to record the expense: A. A patent with a ten-year remaining legal life was purchased for $300,000. The patent will be usable for another eight years. B. A patent was acquired on a new smartphone. The cost of the patent itself was only $24,000, but the market value of the patent is $600,000. The company expects to be able to use this patent for all twenty years of its life.Petes Petroleum, Inc., an SEC registrant with a calendar year-end, is in the business of constructing and operating offs] lore oil platforms. Petes Petroleum is required legally to dismantle and remove the platforms at the end of their useful lives, which is estimated to be 10 years. On January 1, 2019, Pete constructed and began operating an offshore oil platform off the coast of Brazil. The total capitalized cost to construct the platform was 3,700,000. In addition, while the future cost of dismantling the oil platform is difficult to estimate, Pete believes there is a 40% chance that the future cost will be 1,425,000, a 40% chance it will be 1,650,000, and a 20% chance that it will cost 2,125,000. The appropriate discount rate is 12%, and Pete uses the straight-line method of depreciation. Required: 1. Prepare the journal entries that Pete should record in 2019 related to the oil platform. 2. Prepare an amortization schedule for the asset retirement obligation. 3. Next Level Prepare a table showing the effect of accounting for the asset retirement obligation on assets, liabilities, shareholders equity, and net income relative to accounting for the associated costs at the end of the assets service life when the expenditure is made.On January 1, 2014, Klinefelter Company purchased a building for 520,000. The building had an estimated life of 20 years and an estimated residual value of 20,000. The company has been depreciating the building using straight-line depreciation. At the beginning of 2020, the following independent situations occur: a. The company estimates that the building has a remaining life of 10 years (for a total of 16 years). b. The company changes to the sum-of-the-years-digits method. c. The company discovers that it had ignored the estimated residual value in the computation of the annual depreciation each year. Required: For each of the independent situations, prepare all journal entries related to the building for 2020. Ignore income taxes.
- Gray Companys financial statements showed income before income taxes of 4,030,000 for the year ended December 31, 2020, and 3,330,000 for the year ended December 31, 2019. Additional information is as follows: Capital expenditures were 2,800,000 in 2020 and 4,000,000 in 2019. Included in the 2020 capital expenditures is equipment purchased for 1,000,000 on January 1, 2020, with no salvage value. Gray used straight-line depreciation based on a 10-year estimated life in its financial statements. As a result of additional information now available, it is estimated that this equipment should have only an 8-year life. Gray made an error in its financial statements that should be regarded as material. A payment of 180,000 was made in January 2020 and charged to expense in 2020 for insurance premiums applicable to policies commencing and expiring in 2019. No liability had been recorded for this item at December 31, 2019. The allowance for doubtful accounts reflected in Grays financial statements was 7,000 at December 31, 2020, and 97,000 at December 31, 2019. During 2020, 90,000 of uncollectible receivables were written off against the allowance for doubtful accounts. In 2019, the provision for doubtful accounts was based on a percentage of net sales. The 2020 provision has not yet been recorded. Net sales were 58,500,000 for the year ended December 31, 2020, and 49,230,000 for the year ended December 31, 2019. Based on the latest available facts, the 2020 provision for doubtful accounts is estimated to be 0.2% of net sales. A review of the estimated warranty liability at December 31, 2020, which is included in other liabilities in Grays financial statements, has disclosed that this estimated liability should be increased 170,000. Gray has two large blast furnaces that it uses in its manufacturing process. These furnaces must be periodically relined. Furnace A was relined in January 2014 at a cost of 230,000 and in January 2019 at a cost of 280,000. Furnace B was relined for the first time in January 2020 at a cost of 300,000. In Grays financial statements, these costs were expensed as incurred. Since a relining will last for 5 years, Grays management feels it would be preferable to capitalize and depreciate the cost of the relining over the productive life of the relining. Gray has decided to nuke a change in accounting principle from expensing relining costs as incurred to capitalizing them and depreciating them over their productive life on a straight-line basis with a full years depreciation in the year of relining. This change meets the requirements for a change in accounting principle under GAAP. Required: 1. For the years ended December 31, 2020 and 2019, prepare a worksheet reconciling income before income taxes as given previously with income before income taxes as adjusted for the preceding additional information. Show supporting computations in good form. Ignore income taxes and deferred tax considerations in your answer. The worksheet should have the following format: 2. As of January 1, 2020, compute the retrospective adjustment of retained earnings for the change in accounting principle from expensing to capitalizing relining costs. Ignore income taxes and deferred tax considerations in your answer.On May 10, 2019, Horan Company purchased equipment for 25,000. The equipment has an estimated service life of 5 years and zero residual value. Assume that the straight-line depreciation method is used. Required: Compute the depreciation expense for 2019 for each of the following four alternatives: 1. Horan computes depreciation expense to the nearest day. (Use 12 months of 30 days each and round the daily depreciation rate to 2 decimal places.) 2. Horan computes depreciation expense to the nearest month. Assets purchased in the first half of the month are considered owned for the whole month. 3. Horan computes depreciation expense to the nearest whole year. Assets purchased in the first half of the year are considered owned for the whole year. 4. Horan records one-half years depreciation expense on all assets purchased during the year.Referring to PA7 where Kenzie Company purchased a 3-D printer for $450,000, consider how the purchase of the printer impacts not only depreciation expense each year but also the assets book value. What amount will be recorded as depreciation expense each year, and what will the book value be at the end of each year after depreciation is recorded?