Reference no: EM133016871
Question - On July 1, 2021, an entity purchased the rights to a mine for P20,000,000, of which P2,000,000 was allocable to the land. Estimated reserves were 1,500,000 tons. The entity expected to extract and sell 20,000 tons per month.
The entity purchased mining equipment on July 1, 2021 for P8,000,000. The mining equipment had a useful life 8 years. However, after all the resource is removed, the equipment will be of no use and will be sold for P500,000.
1. What amount should be reported as depletion for 2021?
a. 2,880,000
b. 1,440,000
c. 2,250,000
d. 1,125,000
2. What amount should be reported as depreciation for 2021?
a. 1,500,000
b. 1,200,000
c. 600,000
d. 468,750
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