XYZ Corporation, one of the largest mining company, paid P20,000,000 to the local government for the right to explore and extract mineral reserves in an area of interest The following costs were also incurred related to the exploration and evaluation activities of the entity. total exploration costs, P7.000,000 and evaluation costs of P3,000,000. Results of the study revealed that the total estimated mineral reserves is 10.000,000 tons. Nestle Company started its commercial production in the year 2021. The company produced 1,200,000 tons in 2021. What is the amount of amortization/depletion on the capitalized intangible exploration and evaluation cost for the year 2021?

XYZ Corporation, one of the largest mining company, paid P20,000,000 to the local government for the right to explore and extract mineral reserves in an area of interest The following costs were also incurred related to the exploration and evaluation activities of the entity. total exploration costs, P7.000,000 and evaluation costs of P3,000,000. Results of the study revealed that the total estimated mineral reserves is 10.000,000 tons. Nestle Company started its commercial production in the year 2021. The company produced 1,200,000 tons in 2021. What is the amount of amortization/depletion on the capitalized intangible exploration and evaluation cost for the year 2021?

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 5C

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In 20X1, ABC Co. paid P1M to purchase a land containing a total estimated 160,000 tons of extractable mineral ore. The estimated value of the property after the mineral has been removed is P200,000. Extracted operations began in late 20X1 with a total extracted ores of 20,000 tons were sold until the end of 20X2. In 20X3, geological studies indicated that the total amount of mineral deposits had been underestimated by 25,000 tons. During 20X3, 30,000 tons were extracted and 28,000 tons were sold. What is the depletion rate per ton at 20X3? (round answer to nearest centavo/ 2 decimal points)
LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million tons of minerals from this land over the next 20 years, at which time, residual value shall be P6,000,000. The following costs were also incurred related to the mining activities: Successful exploration costs, P10,000,000 and cost of P1,600,000 for dry wells. During the first 2 years of the mine's operations, 300,000 tons were mined each year and sold for P80 per ton. How much would be the depletion for the second year? Kindly show the solution please, thanks!
LM Corporation purchased 20 acres of land for P120,000,000. The company expects to extract 5 million tons of minerals from this land over the next 20 years, at which time, residual value shall be P6,000,000. The following costs were also incurred related to the mining activities: Successful exploration costs, P10,000,000 and cost of P1,600,000 for dry wells. During the first 2 years of the mine's operations, 300,000 tons were mined each year and sold for P80 per ton. How much would be the depletion for the second year? Show the solution please, thanks!
Use the following information for the next two questions: In 20x1, BUCOLIC RURAL Co. acquired land for a total cost of P40,000,000 to be used to quarry marble, limestone, and construction aggregates. Costs incurred to obtain legal right to explore the property amounted to P8,000,000. Expenditures incurred in the exploration for and evaluation of mineral resources before technical feasibility and commercial viability of extracting a mineral resource are demonstrable totaled P12,000,000. Intangible development costs of drilling, tunnels, shafts, and wells before the actual production totaled P20,000,000. BUCOLIC Co. estimates that total recoverable reserves are 100,000,000 units. Furthermore, BUCOLIC Co. expects to sell the land for P4,800,000 after resource is depleted. However, no buyer will pay this price unless the mine is drained, filled and leveled, a process that will cost P800,000. It is BUCOLIC's policy to capitalize all exploration costs. Actual units quarried in 20x1 through…
In 20x1, ABC Mining Corp. acquired the right to use 1,000 acres of land to mine for gold. The lease cost is ₱50,000,000, and the related exploration costs on the property amounted to ₱10,000,000. It is the policy of ABC Mining Corp. to capitalize all costs of exploration and evaluation of mineral resources. Intangible development costs for drilling, tunnels, shafts, and wells incurred before opening the mine amounted to ₱85,000,000. At the end of the mine’s economic useful life, ABC Mining Corp. is required by legislation to restore the site. Estimated restoration costs have a fair value of ₱5,000,000. ABC Mining Corp. estimates that the mine will provide approximately 100,000,000 ounces of gold. ABC extracted 300,000 ounces of gold in 20x2. How much is the depletion charge in 20x2? 450,000 3.360,000 480,000 4. 460,000
At the beginning of the current year, Handsome Company purchased a mineral mine for P36,000,000 with removable ore estimated by geological survey at 2,160,000 tons. The property has an estimated value of P3,600,000 after the ore has been extracted. The entity incurred P10,800,000 of development costs preparing the property for the extraction of ore. During the current year, 270,000 tons were removed and 240,000 tons were sold. What amount of depletion should be included in cost of goods sold for the current year? *a.3,600,000b.4,050,000c.4,800,000d.5,400,000
At the beginning of January 2018, Rock Limited acquired a mine for sh34,000,000. Of this amount, sh. 4,000,000 was ascribed to the land value and the remaining portion to the minerals in the mine. Surveys conducted by geologists have indicated that approximately 480,000,000 units of a precious ore appear to be in the mine. Rock incurred sh. 5,000,000 of development costs associated with this mine prior to any extraction of minerals and estimates that it will require sh. 1,600,000 to prepare the land for an alternative use when all the ore has been removed. During 2018, 40,000,000 units of ore were extracted and 16,000,000 of these units were sold. Compute the total amount of depletion and the cost of the minerals sold in 2018.
Us Oil Company acquired property rights to search for natural resources on land that it is convinced has oil reserves, for $15,418,620. The contract requires that Oriole restore the property to a status usable for a park after drilling and extraction are complete. The estimated cost of this restoration is $2,363,000. Oriole incurs exploration costs of $1,335,000 and intangible development costs of $1,770,000. Geological surveys suggest that approximately 1,113,000 barrels of oil can be extracted from the site. In 2025, Oriole extracts 248,000 barrels of oil. What journal entry is required to record the extraction of the oil for the first year?
Devo Oil Company acquired property rights to search for natural resources on land that it is convinced has oil reserves, for $15,400,000. The contract requires that Devo restore the property to a status usable for a park after drilling and extraction are complete. The estimated cost of this restoration is $2,350,000. Devo incurs exploration costs of $1,320,000 and intangible development costs of $1,535,000. Geological surveys suggest that approximately 1,100,000 barrels of oil can be extracted from the site. In 2025, Devo extracts 235,000 barrels of oil. Instructions (4) If 150,000 barrels of oil are sold within the initial year, what is the cost of goods sold for the oil and the remaining inventory balance?
The Platinum Touch Mining Company paid $4,000,000 for a parcel of land, including the mining rights. In addition, the company spent $564,700 to prepare the site for mining operations. When mining is completed, it is estimated that the residual value of the asset will be $800,000. Scientists estimate that the site contains 150,000 ounces of platinum. A. What is the average depletion cost per ounce? B. If 12,200 ounces were mined in the first year of operation, what is the amount of the depletion cost?
ABC Corporation purchased an island that supposedly has commercially extractable oil. The purchase price was P10,000,000. It paid surveying fees of P500,000, successful exploration costs of P400,000 and unsuccessful exploration costs of P50,000. ABC opted to use the full cost method. After these explorations, it was able to establish the island's technical feasibility and commercial viability. Subsequent costs during the month of March include drilling cost of P200,000, trenching cost of P400,000 and other development costs of P400,000. It extracted 30,000 tons of oil from March to December. The estimated remaining oil as of December 31 is 510,000 tons. If the island can be sold at P1,000,000 after extraction, how much is the depletion expense for the year?
On Jan 1, 20X1 ABC Mining Co. purchased a mine for P2,640,000 with removable ore estimated at 1,200,000 tons. ABC is required by law to restore the land to its original state at an estimated cost of P220,000. Present value of the restoration cost is P180,000. ABC believes that they can sell the land after extracting all the ore at P300,000. Development cost in preparing the mine for production is P360,000. On Dec 31, 20X1, ABC removed and sold 60,000 tons of ore. In its 20X1 profit/loss statement, what amount should ABC report as depletion?