What are the estimated depletion and depreciation charges for the 7th year? Depletion Depreciation P4,845,000 P1,380,000 What are the estimated depletion and depreciation charges for the 11th year? Depletion Depreciation P2,422,500 P690,000 KINDLY PROVIDE SOLUTIONS TO THE GIVEN ANSWERS
MINA MINING CO. has acquired a tract of mineral land for P50,000,000. Mina Mining estimates
that the acquired property will yield 150,000 tons of ore with sufficient mineral content to make
mining and processing profitable. It further estimates that 7,500 tons of ore will be mined the
first and last year and 15,000 tons every year in between. (Assume 11 years of mining
operations.) The land will have a residual value of P1,550,000.
Mina Mining builds necessary structures and sheds on the site at a total cost of P12,000,000. The
company estimates that these structures can be used for 15 years but, because they must be
dismantled if they are to be moved, they have no residual value. Mina Mining does not intend to
use the buildings elsewhere.
Mining machinery installed at the mine was purchased secondhand at a total cost of P3,600,000.
The machinery cost the former owner P9,000,000 and was 50% depreciated when purchased.
Mina Mining estimates that about half of this machinery will still be useful when the present
mineral resources have been exhausted but that dismantling and removal costs will just about
offset its value at that time. The company does not intend to use the machinery elsewhere. The
remaining machinery will last until about one-half the present estimated mineral ore has been
removed and will then be worthless. Cost is to be allocated equally between these two classes
of machinery.
What are the estimated depletion and
Depletion Depreciation
P4,845,000 P1,380,000
What are the estimated depletion and depreciation charges for the 11th year?
Depletion Depreciation
P2,422,500 P690,000
KINDLY PROVIDE SOLUTIONS TO THE GIVEN ANSWERS
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