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How much was the recorded depreciation expense

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Problem - On an audit engagement for 2019, you handled the audit of fixed assets of Aussie Diamond (AD) Mines. This mining company bought the exploration rights of haven Mineral Exploration on June 30, 2019 for P14,580,000. Of this purchase price P9,720,000 was allocated to ore which had remaining reserves estimated at 1,620,000 tons. AD Mines expects to extract 15,000 tons of ore a month with an estimated selling price of P50 per ton. Production started immediately after some new machineries costing P1,200,000 were bought on June 30, 2019. These new machineries had an estimated useful life of 15 years with a scrap value of 10% of cost after the ore estimate has been extracted from the property, at which time the machineries will already be useless.

Among the operating expenses of AD Mines at December 31, 2019 were:

Depletion Expenses P810,000

Depreciation - Machineries 80,000

Required -

1. How much was the recorded depletion expense?

2. How much was the recorded depreciation expense?

3. How much is the audited carrying value of the machinery as of December 31, 2019?

4. How much is the audited carrying value of the ore (wasting asset) as of December 31, 2019?

Reference no: EM132788444

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