1. During year 2, Megumi Co. increased the estimated quantity of copper recoverable from its mine. Megumi uses the units of production depletion method. As a result of the change, which of the following should be reported in Megumi's year 2 financial statements?

Cumulative effect of a change in accounting principle Pro-forma effects on retroactive application of new depletion base

a. Yes Yes

b. Yes No

c. No No

d. No Yes

2. In 2014, Alexandrite Company purchased a tract of land as a possible future plant site. In January, 2022, valuable sulphur deposits were discovered on adjoining property and Alexandrite Company immediately began explorations on its property. In December, 2022, after incurring P800,000 in exploration costs, which were accumulated in an expense account, Alexandrite discovered sulphur deposits appraised at P4,500,000 more than the value of the land. To record the discovery of the deposits, Alexandrite should

a. make no entry.

b. debit P800,000 to an asset account.

c. debit P4,500,000 to an asset account.

d. debit P5,300,000 to an asset account.