Maxine Ltd acquired a mining property in Victoria, called Clarity for $13 million on 1 July 2018and treated it as an area of interest. Maxine Ltd incurred the costs as below:YearDetails$ AmountAugust 2018Right to explore450,0002018 – 2019Exploratory study and drilling3,200,000At the beginning of calendar year 2019, the technical feasibility and commercial viability ofmining the diamond deposit were confirmed. The company's experts estimated that there were10 million carats of diamonds could be commercially exploited. From March 2019 to June2019, the company undertook the following capital investments:CostsEstimated Life (as at 30 June 2019)Mine buildings$4,600,00020 yearsProcessing plant$2,700,0005 yearsOther equipment$3,010,00014 yearsMine buildings cannot be economically removed from the mine location, but the processingplant and other equipment can be economically removed and have alternative uses.On 30 June 2019, Maxine Ltd estimated that the costs of restoration to be incurred at the endof the mine life, as a result of development and construction activities would be $750,000because the company wished to portray itself as a responsible corporate citizen. A discountrate of 8% was identified as relevant for its diamond operation.Production commenced on 1 July 2019. It will take 9 years to exhaust this economicallyrecoverable reserves, after which time the mining property is expected to have no residualvalue. Activities for the year ended on 30 June 2020 were as follows:Carats of diamonds mined.1,500,0001,200,000$52 per carat.$25,100,000.$3,800,000.$1,600,000Carats of diamonds sold..Selling price of diamond...Production costs (excluding depreciation and amortisation).Administration expensesSelling expenses.REQUIRED:Assume all costs incurred during the exploration and evaluation phases were capitalised,prepare a detailed statement of profit and loss for the year ended 30 June 2020. Show allworkings and full explanations for all intermediate steps. Round your answers to the nearestdollars and use the present value tables provided at the end for your calculation.

Maxine Ltd - purchased Mining Property Clarity for $13 Millions Other Cost incurred are Right to…

REQUIRED: Assume all costs incurred during the exploration and evaluation phases were capitalised, prepare a detailed statement of profit and loss for the year ended 30 June 2020. Show all workings and full explanations for all intermediate steps. Round your answers to the nearest dollars and use the present value tables provided at the end for your calculation.

REQUIRED: Assume all costs incurred during the exploration and evaluation phases were capitalised, prepare a detailed statement of profit and loss for the year ended 30 June 2020. Show all workings and full explanations for all intermediate steps. Round your answers to the nearest dollars and use the present value tables provided at the end for your calculation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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