Reference no: EM132997994

Question - The Quesimia Mining Company bought a tract of land containing coal veils for P9,075,000. The tract is expected to yield 1,100,000 tons of coal. The company like wise expects that the quantity mined in each of the succeeding years will be twice the quantity mined in the first year of operations. During the latter part of 2019, installations with an estimated useful life of then years were set up at a cost of P1,925,000. Mining equipment was purchased early in 2020 for P4,400,000 and the equipment has a useful life of eight years and can be transferred conveniently to another location. The installations, on the other hand, shall be abandoned when the coal deposits are exhausted.

The company started operations in January 2020. By the end of the year, the company mined and sold 100,000 tons of coal. Also in 2021, the company incurred additional development cost of P750,000 and mined and sold 150,000 tons of coal.

Based on the above data, answer the following:

1) How much should the company record as depletion expense for 2020?

2) How much should the company record as depreciation expense for 2020 of the Installations?

3) How much should the company record as deprecation expense for 2020 of the Mining equipment?

4) How much should the company as depletion expense for 2021?

5) How much should the company record as total depreciation expense for 2021?