Reference no: EM133012095
Question - In 2021, an entity purchased property with mineral resources for P28,000,000. The property had a residual value of P4,000,000.During 2021, an amount of P3,000,000 was spent for roads and other improvements to aid in the extraction of the resources. Tunnels, bank houses and other fixed installations were also constructed at a cost of P8,000,000. The entity spent P1,000,000 in development cost and P4,000,000 in exploration cost.
Production began in 2022 and the tons extracted totaled 3,000,000 in 2022 and 2,500,000 in 2023. The remaining tons totaled 7,000,000 on December 31, 2022 and 5,500,000 on December 31, 2023.
1. What amount of depletion should be recognized in 2022?
a. 12,000,000
b. 10,800,000
c. 9,600,000
d. 8,700,000
2. What amount of depletion should be reported for 2023?
a. 7,000,000
b. 6,350,000
c. 8,750,000
d. 7,875,000
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