On January 1, 2016, Manika Company purchased land with valuable natural ore deposits for P10,000,000. The residual value of the land was P2,000,000. At the time of purchase, a geological survey estimated a recoverable output of 4,000,000 tons. Early in 2016, roads were constructed on the land to aid in the extraction and transportation of the mined ore at a cost of P1,600,000. In 2016, 500,000 tons were mined and sold. A new survey at the end of 2017 estimated 4,200,000 tons of ore available for mining. In 2017, 800,000 tons were mined and sold. (a) What amount should be recognized as depletion for 2016 and 2017?
On January 1, 2016, Manika Company purchased land with valuable natural ore deposits for P10,000,000. The residual value of the land was P2,000,000. At the time of purchase, a geological survey estimated a recoverable output of 4,000,000 tons. Early in 2016, roads were constructed on the land to aid in the extraction and transportation of the mined ore at a cost of P1,600,000. In 2016, 500,000 tons were mined and sold. A new survey at the end of 2017 estimated 4,200,000 tons of ore available for mining. In 2017, 800,000 tons were mined and sold. (a) What amount should be recognized as depletion for 2016 and 2017?
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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On January 1, 2016, Manika Company purchased land with valuable natural ore deposits for P10,000,000. The residual value of the land was P2,000,000. At the time of purchase, a geological survey estimated a recoverable output of 4,000,000 tons.
Early in 2016, roads were constructed on the land to aid in the extraction and transportation of the mined ore at a cost of P1,600,000. In 2016, 500,000 tons were mined and sold.
A new survey at the end of 2017 estimated 4,200,000 tons of ore available for mining. In 2017, 800,000 tons were mined and sold.
(a) What amount should be recognized as depletion for 2016 and 2017?
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