In 1999, Morton Company purchased a tract of land as a possible future plant site. In January, 2007, valuable sulphur deposits were discovered on adjoining property and Morton Company immediately began explorations on its property. In December, 2007, after incurring P400,000 in exploration costs, which were accumulated in an expense account, Morton discovered sulphur deposits appraised at P2,250,000 more than the value of the land. To record the discovery of the deposits, Morton should O debit P2,250,000 to an asset account O debit P400,000 to an asset account O debit P2,650,000 to asset account O make no entry O Answer not given

In 1999, Morton Company purchased a tract of land as a possible future plant site. In January, 2007, valuable sulphur deposits were discovered on adjoining property and Morton Company immediately began explorations on its property. In December, 2007, after incurring P400,000 in exploration costs, which were accumulated in an expense account, Morton discovered sulphur deposits appraised at P2,250,000 more than the value of the land. To record the discovery of the deposits, Morton should O debit P2,250,000 to an asset account O debit P400,000 to an asset account O debit P2,650,000 to asset account O make no entry O Answer not given

Name: In 1999, Morton Company purchased a tract of land as a possible futur
Uploaded: 2024-03-05T11:50:36.000Z
Channel: Bartleby
Description: In 1999, Morton Company purchased a tract of land as a possible future plant site. In January, 2007, valuable sulphur deposits were discovered onadjoining property and Morton Company immediately began explorations on its property. In December, 2007,

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

On July 1, 2015, Lam Company, a calendar year corporation, purchased the rights to mine. The total purchase price was P16,400,000, of which P2,000,000 was allocated to the land. Estimated reserves were 1,800,000 tons. The entity expects to extract and sell 25,000 tons per month. The entity purchased new equipment on July 1, 2015 for P7,500,000. The equipment had a useful life of 8 years. However, after all the resources is removed, the equipment would be of no use and could be sold for P300,000.What amount should be recorded as depreciation of the mining equipment for 2015?
Diamond Ltd acquired an item of polishing equipment on 1 July 2015 for $440,000. The equipment is expected to have a useful life of 10 years and the straight-line method of depreciation is to be used. It has salvage value of $40,000. On 1 July 2017, the equipment is deemed to have a fair value of$424,000 and revaluation is undertaken in accordance with the Diamond Ltd policy of measuring property, plant and equipment at fair value. The asset is still usable for next 8 years but the salvage value is determined to be zero. The asset is sold for $356,000 on 1 July 2019. Required:Provide the journal entries necessary at the following dates to account for the above transactions and events. (Ignore narrations). Show your working. (10 marks)• 01/07/2015• 01/07/2017• 01/07/2019 Week 4Snowy Ltd acquires Pax Ltd on 1 July 2018 for $5,000,000 being the fair value of the considerationtransferred. At that date, Pax Ltd’s net identifiable assets have a fair value of $4,400,000. Goodwill of$600,000…
In 2013, A MINING Corp. purchased property with natural resources for P 12,400,000 The property was relatively close to a large city and had an expected residual value of P 3,000,000 However, P 1,200,000 will have to be spent to restore the land for use. The following information relates to the use of the property: a) In 2013, A MINING Corp. spent P 800,000 in development costs and P 600,000 in buildings on the property. A MINING Corp. does not anticipate that the buildings will have any utility after the natural resources are depleted. b) In 2014 and 2016, P 600,000 and P 1,600,000, respectively, were spent for additional developments on the mine. c) The tonnage mined and estimated remaining tons for years 2013-2017 are as follows: Year /Tons Extracted remaining/Estimated Tons 2013 2014 1,500,000 2015 1,800,000 2016 1,700,000 2017 900,000 Required: 5,000,000 3,500,000 2,000,000 900,000 1. Prepare necessary journal entries in 2014 up to 2017 2. Determine the following: 2.a Depletion…
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.
Merca Inc. has provided the auditors with the ff. information: - A patent was purchased on January 1, 2015 from Seagull Co. for 6,000,000. Estimated useful life is 10 years. The patent had a net book value of P6,000,000 when Merca bought it from Seagull. Because of recent events, Merca decides that a change in estimated useful life of intangible assets is necessary. Therefore on January 1, 2016, the remaining useful life of the patent purchased on January 1, 2015, is only 5 years from January 1, 2016. -A franchise was purchased on February 1, 2016 for P1,440,000. The contract was for 20 years and terms include 5% revenue from franchise must be paid to the franchisor. Revenue for 2016 was P7,500,000. -The ff. research and development costs were incurred by Merca in 2016: Materials and equipment 426,000 Personnel 567,000 Indirect costs 306,000 1. On December 31, 2016, the carrying amount of the patent should be: a. 4,320,000 b. 4,920,000 c. 4,800,000 d. 4,400,000 2.…
During the reporting period ending 30 June 2014, Sara Limited erected an oil rig in Noosa River. The cost of the rig and associated technology amounted to $99 000 000. The oil rig commenced production on 1 July 2014. At the end of the rig’s useful life, which is expected to be five (5) years, Sara Limited is required by its resource consent to dismantle the oil rig, remove it, and return the site to its original condition. After consulting its own engineers and environmentalists, Sara Limited estimates that if such work was required to be done at the present time it would cost $14 999 995. If we accept that the rate on 5-year government bonds reflects the relevant time value of money, and if the rate is 4 per cent annually, calculate the present value of the restoration provision which would be today.
Question. In 2006, Jarrett Company purchased a tract of land as a possible future plant site. In January, 2014, valuable sulphur deposits were discovered on adjoining property and Jarrett Company immediately began explorations on its property. In December, 2014, after incurring $800,000 in exploration costs, which were accumulated in an expense account, Jarrett discovered sulphur deposits appraised at $4,500,000 more than the value of the land. To record the discovery of the deposits, Jarrett should a. make no entry.