Lipaopao Corporation acquires a coal mine at a cost of p 5,000,000. Intangible development costs total P 1,200,000. After extraction has occurred, Lipaopao must restore the property (estimated fair value of the obligation is P600,000), after which can be sold for P 1,700,000. Baton estimates that 50,000 tons of coal can be extracted. If 9,000 tons were extracted during the first year, which of the following would be included in the journal entry to record depletion? a. Debit to Accumulated Depletion for P 918,000 b. Debit to inventory for P 918,000 c. Credit to inventory for P 900,000 d. Credit to Accumulated Depletion for P 1,530,000
Lipaopao Corporation acquires a coal mine at a cost of p 5,000,000. Intangible development costs total P 1,200,000. After extraction has occurred, Lipaopao must restore the property (estimated fair value of the obligation is P600,000), after which can be sold for P 1,700,000. Baton estimates that 50,000 tons of coal can be extracted. If 9,000 tons were extracted during the first year, which of the following would be included in the journal entry to record depletion? a. Debit to Accumulated Depletion for P 918,000 b. Debit to inventory for P 918,000 c. Credit to inventory for P 900,000 d. Credit to Accumulated Depletion for P 1,530,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Lipaopao Corporation acquires a coal mine at a cost of p 5,000,000. Intangible development costs total
P 1,200,000. After extraction has occurred, Lipaopao must restore the property (estimated fair value
of the obligation is P600,000), after which can be sold for P 1,700,000. Baton estimates that 50,000
tons of coal can be extracted.
If 9,000 tons were extracted during the first year, which of the following would be included in the
journal entry to record depletion?
a. Debit to Accumulated Depletion for P 918,000
b. Debit to inventory for P 918,000
c. Credit to inventory for P 900,000
d. Credit to Accumulated Depletion for P 1,530,000
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