Problem 07-36 (Static) [LO 7-10] A&Z incurred $450,000 of capitalized costs to develop a uranium mine. The corporation's geologists estimated that the mine would produce 900,000 tons of ore. During the year, 215,000 tons were extracted and sold. A&Z's gross revenues from the sales totaled $689,000, and its operating expenses for the mine were $200,000. Required: Calculate A&Z's depletion deduction. Depletion deduction $ 105,000
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- 14. In January 20X1, ABC Mining Corporation purchased a mineral mine for P7,200,000 with removable ore estimated by geological surveys at 4,320,000 tons. The property has an estimated value of P720,000 after the ore has been extracted. ABC incurred P2,160,000 of development costs preparing the property for the extraction of ore. During 20X1, 540,000 tons were removed and 480,000 tons were sold. For the year ended December 31, 20X1, ABC should include what amount of depletion chargeable to ore inventory?5. In January 20X1, ABC Mining Corporation purchased a mineral mine for P7,200,000 with removable ore estimated by geological surveys at 4,320,000 tons. The property has an estimated value of P720,000 after the ore has been extracted. ABC incurred P2,160,000 of development costs preparing the property for the extraction of ore. During 20X1, 540,000 tons were removed and 480,000 tons were sold. For the year ended December 31, 20X1, ABC should include what amount of depletion in its cost of goods sold?7. Copper Mines, Inc (CMI) . purchased property for the purpose of extracting copper ore. CMl paid $3,500,000 for the property plus $100,000 closing costs. CMl estimates it will be able to extract 800,000 tons of copper ore from the property over the next 10 years. The actual number of tons of copper ore extracted during the next ten years are as follows: 95,000 tons each in years 1,2,3; 80,000 tons each of years 4,5,6&7; and 75,000 tons each of years 8,9,& 10. It is believed that after 10 years the extractable ore will have been removed and the land will be useful for cattle grazing with an estimated value of $200,000. What is the amount of expense related to the ore extraction to be recognized for year 8? a) b) c) d) e) 318,750 330,000 340,000 350,000 360,000
- South African Gold Mines, Inc. is writing off its $210 million investment using the cost depletion method. An estimated 700,000 ounces of gold areavailable in its developed mines. This year 35,000 ounces were produced and sold at an average price of $1400 per ounce. Taxable income for the year is estimated at $4.8 million. The cost depletion for the year is closest to:a. $7.35 million, which is 15% of the gross income of $49.0 million.b. $2.4 million, which is 50% of estimated taxable income.c. $10.5 million.d. $42 million.7 The Piney Copper Company purchased an ore- bearing tract of land for $10.0M. The geologist for Piney estimated the recoverable copper reserves to be 500,000 tons. During the first year, 50,000 tons were mined and 40,000 tons were sold for $5.0M. Expenses (not including depletion allowances) were $3.0M. (a) What are the percentage depletion and the cost depletion allowances?10. In 20X4, ABC Mining Inc. purchased land for P5,600,000 that had a natural resource supply estimated at 4,000,000 tons. When the natural resources are removed, the land has an estimated value of P640,000. The required restoration cost for the property is estimated to be P800,000. Development and road construction costs on the land were P560,000, and a building was constructed at a cost of P88,000 with an estimated P8,000 salvage value when all the natural resources have been extracted. During 20X5, additional development costs of P272,000 were incurred, but additional resources were not discovered. Production for 20X4 and 20X5 was 700,000 tons and 900,000 tons, respectively. Round depletion rate to 2 decimal places. Depletion for 20X5 is?
- 33. Frace company quarries limestone, crushes it and sells it to be used in road building. The entity paid P20,000,000 for a certain quarry. The property can be sold for P6,000,000 after production ceases. Estimated tons of total reserves 20,000,000 Tons quarried through December 31, 2016 8,000,000 Tons quarried in 2017 3,000,000 An engineering study performed in 2017 indicated that on January 1, 2017, 15,000,000 tons of limestone were available. What amount of depletion should be recognized for 2017?7. In 20X4, ABC Mining Inc. purchased land for P5,600,000 that had a natural resource supply estimated at 4,000,000 tons. When the natural resources are removed, the land has an estimated value of P640,000. The required restoration cost for the property is estimated to be P800,000. Development and road construction costs on the land were P560,000, and a building was constructed at a cost of P88,000 with an estimated P8,000 salvage value when all the natural resources have been extracted. During 20X5, additional development costs of P272,000 were incurred, but additional resources were not discovered. Production for 20X4 and 20X5 was 700,000 tons and 900,000 tons, respectively. Round depletion charge to the nearest cent. On 20X4, depletion charge is?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!
- 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!13. ABC Company purchased a tract of resource land in 20X0 for 39,600,000. The content of the tract was estimated at 1,200,000 units. When the resource has been exhausted, it is estimated that the land will be worth 1,200,000. Fixed installations were set up at a cost of 9,600,000. Mining equipment was purchased on January 1, 20X1 for 12,400,000. The life of the fixed installations is 8 years and the equipment, 4 years. In 20X1,120,000 units have been extracted. This was one-half of the annual extraction, which can be expected following the first year of operations. ABC Company should record depletion for 20X1 at1. In 20X4, ABC Mining Inc. purchased land for P5,600,000 that had a natural resource supply estimated at 4,000,000 tons. When the natural resources are removed, the land has an estimated value of P640,000. The required restoration cost for the property is estimated to be P800,000. Development and road construction costs on the land were P560,000, and a building was constructed at a cost of P88,000 with an estimated P8,000 salvage value when all the natural resources have been extracted. During 20X5, additional development costs of P272,000 were incurred, but additional resources were not discovered. Production for 20X4 and 20X5 was 700,000 tons and 900,000 tons, respectively. Round depletion and depreciation rates to 2 decimal places. In the year 20X5, the total inventoriable cost is?