Problem 28-13 (AICPA Adapted) In 2019, Lepanto Mining Company purchased property with natural resources for P28,000,000. The property nad a residual value of P5,000,000. However, the entity is required to restore the property to the original condition at a discounted amount of P2,000,000. In 2019, the entity spent P1,000,000 in development cost and constructed a building on the property costing P3,000,000. The entity does not anticipate that the building will have utility after the natural resources are removed. In 2020, an amount of P1,000,000 was spent for additional development on the mine. The tonnage mined and estimated remaining tons are: Tons extracted Tons remaining 10,000,000 7,000,000 2,500,000 2019 3,000,000 3,500,000 2020 2021 1. What amount should be recognized as depletion for 2020? a. 6,900,000 b. 9,600,000 c. 8,100,000 d. 8,400,000 2. What amount should be recognized as depletion for 2021? a. 10,150,000 b. 11,025,000 'c. 15,750,000 9,450,000 d.
Problem 28-13 (AICPA Adapted) In 2019, Lepanto Mining Company purchased property with natural resources for P28,000,000. The property nad a residual value of P5,000,000. However, the entity is required to restore the property to the original condition at a discounted amount of P2,000,000. In 2019, the entity spent P1,000,000 in development cost and constructed a building on the property costing P3,000,000. The entity does not anticipate that the building will have utility after the natural resources are removed. In 2020, an amount of P1,000,000 was spent for additional development on the mine. The tonnage mined and estimated remaining tons are: Tons extracted Tons remaining 10,000,000 7,000,000 2,500,000 2019 3,000,000 3,500,000 2020 2021 1. What amount should be recognized as depletion for 2020? a. 6,900,000 b. 9,600,000 c. 8,100,000 d. 8,400,000 2. What amount should be recognized as depletion for 2021? a. 10,150,000 b. 11,025,000 'c. 15,750,000 9,450,000 d.
Chapter17: Property Transactions: § 1231 And Recapture Provisions
Section: Chapter Questions
Problem 40P
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Transcribed Image Text:a residual value of P5,000,000.
In 2019, Lepanto Mining Company purchased property
Problem 28-13 (AICPA Adapted)
with natural resources for P28,000,000. The property had
However, the entity is required to restore the property
to the original condition at a discounted amount of
P2,000,000.
In 2019, the entity spent P1,000,000 in development cost
and constructed a building on the property costing
P3,000,000.
The entity does not anticipate that the building will have
utility after the natural resources are removed.
In 2020, an amount of P1,000,000 was spent for additional
development on the mine.
The tonnage mined and estimated remaining tons are:
Tons extracted
Tons remaining
10,000,000
7,000,000
2,500,000
2019
3,000,000
3,500,000
2020
2021
1. What amount should be recognized as depletion for 2020?
a. 6,900,000
b. 9,600,000
c. 8,100,000
d. 8,400,000
2. What amount should be recognized as depletion for 2021?
a. 10,150,000
b. 11,025,000
c. 15,750,000
d.
9,450,000
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