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Calculate the amount of depletion

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Reference no: EM132993501

White Company paid P10,000,000 for land with valuable natural ore deposits, on Jan. 2, 2020. The land's projected residual value was P2,000,000. A geological study projected 2,000,000 tons of removable ore were beneath the ground at the time of acquisition. Roads were built on the property in early 2020 to assist with the extraction and transportation of extracted ore at a cost of P750,000.

  • 50,000 tons were mined in 2020. The company dismissed its mining engineer in 2021 and recruited a new expert.
  • According to a recent study conducted at the end of 2021, 3,000,000 tons of ore were eligible for mining. 150,000 tons were extracted in 2021. The entire ore extracted was sold.

Problem 1: For the year 2021, calculate the amount of depletion.

a) P372,000

b) P433,500

c) P426,000

d) P406,500

Reference no: EM132993501

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