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

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

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 3RE: Utica Corporation paid 360,000 to purchase land and a building. An appraisal showed that the land is...

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Utica Corporation paid 360,000 to purchase land and a building. An appraisal showed that the land is worth 100,000 and the building is worth 300,000. What cost should Utica assign to the land and to the building, respectively?
1. 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?
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?
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?
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?
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?
3. ABC Company acquired a tract of land containing an extractable natural resource. ABC is required by the purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 2,500,000 tons and that the land will have a value of P1,000,000 after restoration. Relevant cost information follows: Land .- P9,000,000 and Estimated restoration costs - 1,500,000. What should be the depletion charge per ton of extracted material?
17.ABC Company acquired a tract of land containing an extractable natural resource. ABC Co. is required by the purchase contract to restore the land to a condition suitable for recreational use after extraction of the natural resource. Geological surveys estimated that the recoverable reserves will be 200,000 tons and that the land will have a value of P1,000,000 after restoration. Relevant costs information are the following: Land acquisition cost P8,000,000; Estimated restoration cost P500,000; Development and geological surveys cost P1,500,000. What should be the depletion rate per ton of resource?
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?
2. Cooler Company acquired a tract of land containing an extractable natural resource. Cooler is required by the purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 5,000,000 tons and that the land will have of P1,000,000 after restoration. Relevant cost information as follows:Land P 9,000,000Estimated restoration costs 1,500,000If Cooler maintains no inventories of extracted material, what should be the depletion expense per ton of extracted material?
Land with an old building was acquired for P6,000,000. The land was valued at P5,000,000 and the building value was P1,000,000. Shortly after acquisition, the old building was demolished at a cost of P200,000. Proceeds from sale of salvage materials on the demolished building amounts to P 5,000. A new building was constructed for P3,000,000 plus the following costs: Excavation fees-P120,000; Building permit fee-P40,000; Payment for insurance premium of construction workers during the construction period- P75,000. What is the total costs of the new building?
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!