LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million tons of minerals from this land 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 land 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?
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 7E: Loban Company purchased four cars for 9,000 each and expects that they will be sold in 3 years for...
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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 land 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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