On January 2020, Mina Company paid the national government a fee in the amount of P129,000,000 for an area of interest with removable ore estimated by geological surveys at 10,000,000 tons. Mina is required by the national government to restore the area of interest after the extraction of the estimated units of reserves, Mina Company estimates that it will take 10 years to fully extract the reserves and estimates its restoration cost to be P10,000,000.  The relevant discount rate is 10% (use 3 decimal places to round off the present value factor).   The Company also incurred P2,150,000 of development costs in preparing the property for the extraction of the ore. During 2020, 540,000 tons were mined.   How much is the depletion/amortization expense for the year ended December 31, 2020? Group of answer choices 7,082,100 6,966,000 7,173,900 7,290,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question
100%

On January 2020, Mina Company paid the national government a fee in the amount of P129,000,000 for an area of interest with removable ore estimated by geological surveys at 10,000,000 tons. Mina is required by the national government to restore the area of interest after the extraction of the estimated units of reserves, Mina Company estimates that it will take 10 years to fully extract the reserves and estimates its restoration cost to be P10,000,000.  The relevant discount rate is 10% (use 3 decimal places to round off the present value factor).

 

The Company also incurred P2,150,000 of development costs in preparing the property for the extraction of the ore. During 2020, 540,000 tons were mined.

 

How much is the depletion/amortization expense for the year ended December 31, 2020?

Group of answer choices
7,082,100
6,966,000
7,173,900
7,290,000
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Depletions and Amortizations
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education