Lipaopao Corporation acquires a coal mine at a cost of p 5,000,000. Intangible development costs total P 1,200,000. After extraction has occurred, Lipaopao must restore the property (estimated fair value of the obligation is P600,000), after which can be sold for P 1,700,000. Baton estimates that 50,000 tons of coal can be extracted. If 9,000 tons were extracted during the first year, which of the following would be included in the journal entry to record depletion? a. Debit to Accumulated Depletion for P 918,000 b. Debit to inventory for P 918,000 c. Credit to inventory for P 900,000 d. Credit to Accumulated Depletion for P 1,530,000
Lipaopao Corporation acquires a coal mine at a cost of p 5,000,000. Intangible development costs total P 1,200,000. After extraction has occurred, Lipaopao must restore the property (estimated fair value of the obligation is P600,000), after which can be sold for P 1,700,000. Baton estimates that 50,000 tons of coal can be extracted. If 9,000 tons were extracted during the first year, which of the following would be included in the journal entry to record depletion? a. Debit to Accumulated Depletion for P 918,000 b. Debit to inventory for P 918,000 c. Credit to inventory for P 900,000 d. Credit to Accumulated Depletion for P 1,530,000
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter11: Depreciation, Depletion, Impairment, And Disposal
Section: Chapter Questions
Problem 19E
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Lipaopao Corporation acquires a coal mine at a cost of p 5,000,000. Intangible development costs total
P 1,200,000. After extraction has occurred, Lipaopao must restore the property (estimated fair value
of the obligation is P600,000), after which can be sold for P 1,700,000. Baton estimates that 50,000
tons of coal can be extracted.
If 9,000 tons were extracted during the first year, which of the following would be included in the
journal entry to record depletion?
a. Debit to Accumulated Depletion for P 918,000
b. Debit to inventory for P 918,000
c. Credit to inventory for P 900,000
d. Credit to Accumulated Depletion for P 1,530,000
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