On January, 2023, Big Company purchased a mineral mine for P2,640,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, Big Company will be required by law to restore the land to its original condition at an estimated cost of P220,000. The present value of the estimated restoration costs is P180,000. Big Company believes it will be able to sell the property afterwards for P300,000. During 2023, Big Company incurred P360,000 development costs preparing the mine for production and removed and sold 60,000 tons of ore. In its 2023 Income Statement, what amount should Big Company report as depletion? a. 135,000 b. 144,000 c. 150,000 d. 159,000
On January, 2023, Big Company purchased a mineral mine for P2,640,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, Big Company will be required by law to restore the land to its original condition at an estimated cost of P220,000. The present value of the estimated restoration costs is P180,000. Big Company believes it will be able to sell the property afterwards for P300,000. During 2023, Big Company incurred P360,000 development costs preparing the mine for production and removed and sold 60,000 tons of ore. In its 2023 Income Statement, what amount should Big Company report as depletion? a. 135,000 b. 144,000 c. 150,000 d. 159,000
Chapter8: Depreciation, Cost Recovery, Amortization, And Depletion
Section: Chapter Questions
Problem 29CE
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On January, 2023, Big Company purchased a mineral mine for P2,640,000 with removable ore estimated at 1,200,000 tons. After it has extracted all the ore, Big Company will be required by law to restore the land to its original condition at an estimated cost of P220,000. The present value of the estimated restoration costs is P180,000. Big Company believes it will be able to sell the property afterwards for P300,000. During 2023, Big Company incurred P360,000 development costs preparing the mine for production and removed and sold 60,000 tons of ore. In its 2023 Income Statement, what amount should Big Company report as depletion?
a. 135,000
b. 144,000
c. 150,000
d. 159,000
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