Miyazono Ltd, which operated a silver, lead and zinc mine, was purchased by Pagnozzi Ltd for $112000000 (residual value $10000000). It is estimated that the mine will produce 25million tonnes of ore. Mining equipment with a useful life of 12 years was installed at a cost of $6 000000. Extraction of ore will exhaust the mine in about 10 years, after which time the equipment will be abandoned.

Required

A.    Prepare entries for Pagnozzi Ltd to record amortisation of the mine and depreciation of the mining equipment for the first year, assuming that 2000000 tonnes of silver, lead and zinc ore were mined and sold.

B.    Prepare a partial statement of financial position for Pagnozzi Ltd showing how the mine and the mining equipment would be reported at the end of the first year of operations.