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    Depletion For 2019 1,200,000.00

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    Paula Mae Dacanay
    Mankayan Company purchased land for mining in 2019 for P10 million, with P2 million estimated as the land's residual value. An initial survey estimated 4 million recoverable tons of ore. In 2019, 500,000 tons were mined and roads were built for P1.6 million. A new survey in 2020 estimated 4.2 million recoverable tons, and 800,000 tons were mined that year.

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    Depletion For 2019 1,200,000.00

    Uploaded by

    Paula Mae Dacanay
    3K views2 pages
    Mankayan Company purchased land for mining in 2019 for P10 million, with P2 million estimated as the land's residual value. An initial survey estimated 4 million recoverable tons of ore. In 2019, 500,000 tons were mined and roads were built for P1.6 million. A new survey in 2020 estimated 4.2 million recoverable tons, and 800,000 tons were mined that year.

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    Inteermediate accounting 1 activity

    Original Title

    Depletion1

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    Mankayan Company purchased land for mining in 2019 for P10 million, with P2 million estimated as the land's residual value. An initial survey estimated 4 million recoverable tons of ore. In 2019, 500,000 tons were mined and roads were built for P1.6 million. A new survey in 2020 estimated 4.2 million recoverable tons, and 800,000 tons were mined that year.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    3K views2 pages

    Depletion For 2019 1,200,000.00

    Uploaded by

    Paula Mae Dacanay
    Mankayan Company purchased land for mining in 2019 for P10 million, with P2 million estimated as the land's residual value. An initial survey estimated 4 million recoverable tons of ore. In 2019, 500,000 tons were mined and roads were built for P1.6 million. A new survey in 2020 estimated 4.2 million recoverable tons, and 800,000 tons were mined that year.

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    On January 1, 2019, Mankayan Company purchased land with valuable natural ore deposits for P10,

    000,000. The residual value of the land was P2, 000,000. At the time of purchase, a geological survey
    estimated a recoverable output of 4,000,000 tons.

    Early in 2019, roads were constructed on the land to aid in the extraction and transportation of the
    mined ore at a cost of P1, 600,000. In 2019, 500,000tons were mined and sold,

    A new survey at the end of 2020 estimated 4,200,000 tons of ore available for mining. In 2020, 800,000
    tons were mined and sold.

    1. What amount should be recognized as depletion for 2019?

    1.1 Ore Property 10,000,000.00

    Road construction 1,600,000.00

    Total 11,600,000.00

    Less: Residual Value 2,000,000.00

    Depletable Amount 9,600,000.00

    Divided by: Est. Extraction 4,000,000.00

    Rate 2.40

    Multiply by: Mined 500,000

    Depletion for 2019 1,200,000.00

    2. What amount should be recognized as depletion for 2020?

    1.2 Depletable amount 9,600,000.00

    Less: depletion fr 2019 1,200,000.00

    Depletable amount 8,400,000.00


    Divided by:

    (4,200,000+800K) 5,000,000.00

    Rate 1.68
    Multiply by: Mined in
    2020 800,000.00

    Depletion for 2020 1,344,000.00

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