On January 2020, Mina Company paid the national government a fee in the amount of P129,000,000 for an area of interest with removable ore estimated by geological surveys at 10,000,000 tons. Mina is required by the national government to restore the area of interest after the extraction of the estimated units of reserves, Mina Company estimates that it will take 10 years to fully extract the reserves and estimates its restoration cost to be P10,000,000. The relevant discount rate is 10% (use 3 decimal places to round off the present value factor). The Company also incurred P2,150.000 of development costs in preparing the property for the extraction of the ore. During 2020, 540.000 tons were mined. How much is the depletion/amortization expense for the year ended December 31, 2020? O 7.082.100 O6.966,000 O7.173.900 O 7.290,000

On January 2020, Mina Company paid the national government a fee in the amount of P129,000,000 for an area of interest with removable ore estimated by geological surveys at 10,000,000 tons. Mina is required by the national government to restore the area of interest after the extraction of the estimated units of reserves, Mina Company estimates that it will take 10 years to fully extract the reserves and estimates its restoration cost to be P10,000,000. The relevant discount rate is 10% (use 3 decimal places to round off the present value factor). The Company also incurred P2,150.000 of development costs in preparing the property for the extraction of the ore. During 2020, 540.000 tons were mined. How much is the depletion/amortization expense for the year ended December 31, 2020? O 7.082.100 O6.966,000 O7.173.900 O 7.290,000

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

Chapter10: Property, Plant And Equipment: Acquisition And Subsequent Investments

Section: Chapter Questions

Problem 6RE

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Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for 120,000 miles. Montello uses the units-of-production depreciation method and in year one it expects to use the truck for 23,000 miles. Calculate the annual depreciation expense.
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After discovering a new gold vein in the Colorado mountains, CTC Mining Corporation must decide whether to go ahead and develop the deposit. The most cost-effective method of mining gold is sulfuric acid extraction, a process that could result in environmental damage. Before proceeding with the extraction, CTC must spend 900,000 for new mining equipment and pay 165,000 for its installation. The mined gold will net the firm an estimated 350,000 each year for the 5-year life of the vein. CTCs cost of capital is 14%. For the purposes of this problem, assume that the cash inflows occur at the end of the year. a. What are the projects NPV and IRR? b. Should this project be undertaken if environmental impacts were not a consideration? c. How should environmental effects be considered when evaluating this or any other project? How might these concepts affect the decision in part b?
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