On an audit engagement for 20X0, you handled the audit of fixed assets of ABC Copper Mines. This mining company bought the exploration rights of XYZ Exploration on June 30, 20X0 for P7,290,000. Of this purchase price, P4,860,000 was allocated to copper ore which had remaining reserves estimated at 1,620,000 tons. ABC Copper 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 machines costing P600,000 were bought on June 30, 20X0. These new machineries had an estimated useful life of 15 years with a scrap value of 10% of the cost after the ore estimated has been extracted from the property, at which time the machinery will already be useless. Among the operating expenses of ABC Copper Mines on December 31, 20X0 were: Depletion expense - 405,000 and depreciation of machinery - 40,000. Round depreciation rate to 2 decimal places. The adjusted depreciation at year-end amounted to?
On an audit engagement for 20X0, you handled the audit of fixed assets of ABC Copper Mines. This mining company bought the exploration rights of XYZ Exploration on June 30, 20X0 for P7,290,000. Of this purchase price, P4,860,000 was allocated to copper ore which had remaining reserves estimated at 1,620,000 tons. ABC Copper 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 machines costing P600,000 were bought on June 30, 20X0. These new machineries had an estimated useful life of 15 years with a scrap value of 10% of the cost after the ore estimated has been extracted from the property, at which time the machinery will already be useless. Among the operating expenses of ABC Copper Mines on December 31, 20X0 were: Depletion expense - 405,000 and depreciation of machinery - 40,000. Round depreciation rate to 2 decimal places. The adjusted depreciation at year-end amounted to?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- On an audit engagement for 20X0, you handled the audit of fixed assets of ABC Copper Mines. This mining company bought the exploration rights of XYZ Exploration on June 30, 20X0 for P7,290,000. Of this purchase price, P4,860,000 was allocated to copper ore which had remaining reserves estimated at 1,620,000 tons. ABC Copper 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 machines costing P600,000 were bought on June 30, 20X0. These new machineries had an estimated useful life of 15 years with a scrap value of 10% of the cost after the ore estimated has been extracted from the property, at which time the machinery will already be useless. Among the operating expenses of ABC Copper Mines on December 31, 20X0 were: Depletion expense - 405,000 and
depreciation of machinery - 40,000. Round depreciation rate to 2 decimal places. The adjusted depreciation at year-end amounted to?
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