LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million tons of minerals from this lad over the next 20 years, at which time, residual value shall be P6,000,000. The following costs were also incurred related to the mining activities: Successful exploration costs, P10,000,000 and cost of P1,600,000 for dry wells. During the first 2 years of the mine’s operations, 300,000 tons were mined each year and sold for P80 per ton. How much would be the depletion for the second year?
LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million tons of minerals from this lad over the next 20 years, at which time, residual value shall be P6,000,000. The following costs were also incurred related to the mining activities: Successful exploration costs, P10,000,000 and cost of P1,600,000 for dry wells. During the first 2 years of the mine’s operations, 300,000 tons were mined each year and sold for P80 per ton. How much would be the depletion for the second year?
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 29CE
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LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million tons of minerals from this lad over the next 20 years, at which time, residual value shall be P6,000,000. The following costs were also incurred related to the mining activities: Successful exploration costs, P10,000,000 and cost of P1,600,000 for dry wells. During the first 2 years of the mine’s operations, 300,000 tons were mined each year and sold for P80 per ton. How much would be the depletion for the second year?
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