WorksheetsDepletion
Total questions: 9
Worksheet time: 17mins
Depletion expense
Is usually part of cost of goods sold
Includes tangible equipment cost in the depletable amount
Excludes intangible development cost from the depletable amount
Excludes restoration cost from the depletable amount
The most common method of computing depletion is
Percentage depletion method
Decreasing charge method
Straight line
Production or output method
Which of the following expenditures would never qualify as an exploration and evaluation asset?
Expenditure for acquisition of rights to explore
Expenditure for exploratory drilling
Expenditures related to the development of mineral resource
Expenditures for activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource
Which measurement model applies to exploration and evaluation asset subsequent to initial recognition?
The cost model
The revaluation model
Either the cost model or the revaluation model
The recoverable amount model
Information needed to compute a depletion charge per unit includes the
Estimated total amount of resources available for removal
Amount of resources removed during the period
Cumulative amount of resources removed
Amount of resources sold during the period
Maggie Sharrer Company expects to extract 20 million tons of coal from a mine that cost P12 million. If no residual value is expected and 2 million tons are mined and sold in the first year, the entry to record depletion will include a:
debit to Accumulated Depletion of P2,000,000.
credit to Depletion Expense of P1,200,000
debit to Depletion Expense of P1,200,000
credit to Accumulated Depletion of P2,000,000
In 2019, Hope Company paid P4,000,000 to purchase land containing a total estimated 160,000 tons to extractable mineral deposits. The estimated value of the property after the mineral has been removed is P800,000. Extraction activities began in 2020 and by the end of the year, 20,000 tons had been recovered and sold. In 2021, geological studies indicated that the total amount of mineral deposits had been understated by 60,000 tons. During 2021, 300,00 tons were extracted, and 28,000 tons were sold.
What is the depletion rate per ton in 2021?
P12.73
P14.00
P15.56
P20.00
Nestle Corporation, one of the largest mining company, purchased 20 acres of land for P60,000,000. The company expected to extract 5 million tons of mine from this land over the next 20 years at which time, residual value shall be P3,000,000. The following cost were also incurred related to the mining activities: Successful exploration cost, P5,000,000 and cost of P800,000 for dry wells. During the first 2 years of the mine's operations, 300,000 tons were mined each year and sold for P80 per ton.
How much would be the depletion for the first year?
P3,000,000
P3,500,000
P3,720,0000
P3,768,000
Neglected Corporation purchased land for P6,000,000. The company expected to extract 1 million tons of mine from this land over the next 20 years at which time, residual value shall be zero. During the first 2 years of the mine's operations, 30,000 tons were mined each year and sold for P80 per ton. The estimate of the total remaining lifetime capacity of the mine was raised to 1,200,000 tons at the start of the third year and the residual value was estimated to be P480,000. During the third year, 50,000 tons were mined and sold for P85 per ton.
How much would be the depletion for the third year.
P215,000
P227,500
P225,000
P235,000
