KLM Mining Company constructed a building costing P2, 800,000 on the mine property. The estimated residual value will not benefit the entity and will be ignored for purposes of computing depreciation. The building has an estimated life of 10 years. The total estimated recoverable output from the mine is 500,000 tons. The production of the first four years of operations was: First year 100,000 tons Second year 100,000 tons Third year Shut down, no output Fourth year 100,000 tons Determine the depreciation for the fourth year. 490,000 b. 560,000 c. 210,000 d. 336,000

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

Chapter11: Depreciation, Depletion, Impairment, And Disposal

Section: Chapter Questions

Problem 19E

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KLM Mining Company constructed a building costing P2, 800,000 on the mine property. The estimated residual value will not benefit the entity and will be ignored for purposes of computing depreciation.

The building has an estimated life of 10 years. The total estimated recoverable output from the mine is 500,000 tons. The production of the first four years of operations was:

First year 100,000 tons

Second year 100,000 tons

Third year Shut down, no output

Fourth year 100,000 tons

Determine the depreciation for the fourth year.

490,000 b. 560,000 c. 210,000 d. 336,000

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