n July 1, 2019, Lam Company, a calendar year entity, purchased the rights to a mine. The total purchase price was P14,000,000, of which P2,000,000 was allocable to the land. Estimated reserves were 1,500,000 tons. Lam expects to extract and sell 25,000 tons per month. Lam purchased new equipment on July 1, 2019. The equipment was purchased for P8,000,000 and has a useful life of 8 years. However, after all the resources are removed, the equipment will be of no use and will be sold for P500, 000. The depreciation of the equipment for 2019 is a. 937,500 b. 468,700 c. 750,000 d. 500,000
n July 1, 2019, Lam Company, a calendar year entity, purchased the rights to a mine. The total purchase price was P14,000,000, of which P2,000,000 was allocable to the land. Estimated reserves were 1,500,000 tons. Lam expects to extract and sell 25,000 tons per month. Lam purchased new equipment on July 1, 2019. The equipment was purchased for P8,000,000 and has a useful life of 8 years. However, after all the resources are removed, the equipment will be of no use and will be sold for P500, 000. The depreciation of the equipment for 2019 is a. 937,500 b. 468,700 c. 750,000 d. 500,000
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 8MC: On July 1, 2018, Mundo Corporation purchased factory equipment for 50,000. Residual value was...
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On July 1, 2019, Lam Company, a calendar year entity, purchased the rights to a mine. The total purchase price was P14,000,000, of which P2,000,000 was allocable to the land. Estimated reserves were 1,500,000 tons. Lam expects to extract and sell 25,000 tons per month. Lam purchased new equipment on July 1, 2019. The equipment was purchased for P8,000,000 and has a useful life of 8 years. However, after all the resources are removed, the equipment will be of no use and will be sold for P500, 000. The depreciation of the equipment for 2019 is
a. 937,500
b. 468,700
c. 750,000
d. 500,000
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