Problem 28-11 (AICPA Adapted) On July 1, Lethargic 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. The entity expects to extract and sell 25,000 tons per month. The entity purchased new equipment on July 1. The equipment was purchased for P8,000,000 and had a useful life of 4 years with no residual value. 1. What is the depletion for the current year? а. 1,200,000 b. 2,400,000 с. 1,950,000 d. 1,400,000 2. What is the depreciation of the equipment for the current year? a. 1,600,000 b. 2,000,000 c. 1,000,000 d. 1,200,000

Problem 28-11 (AICPA Adapted) On July 1, Lethargic 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. The entity expects to extract and sell 25,000 tons per month. The entity purchased new equipment on July 1. The equipment was purchased for P8,000,000 and had a useful life of 4 years with no residual value. 1. What is the depletion for the current year? а. 1,200,000 b. 2,400,000 с. 1,950,000 d. 1,400,000 2. What is the depreciation of the equipment for the current year? a. 1,600,000 b. 2,000,000 c. 1,000,000 d. 1,200,000

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter8: Operating Assets: Property, Plant, And Equipment, And Intangibles

Section: Chapter Questions

Problem 8.9MCP

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