What amount of depletion should be included in cost of goods sold for the current year?...

 

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What amount of depletion should be included in cost of goods sold for the current year? At the beginning of the current year, Jasmine Company acquired property which contained mineral deposit. The acquisition cost of the property was P20,000,000. Geological survey indicated that 5,000,000 tons of mineral may be extracted. It is further estimated that the property can be sold for P5,000,000 following mineral extraction. The entity was legally required to restore the land to a condition appropriate for resale at a discounted amount of P2,000,000. After acquisition, the following costs were incurred: Exploration cost Development cost related to drilling of wells Development cost related to production equipment The production equipment had a useful life of 5 years and the mineral property can be fully depleted in about 8 years. The company extracted 600,000 tons of the mineral and sold 450,000 tons during the current year. 3,000,000 6,000,000 4,000,000 What amount of depletion should be included in cost of goods sold for the current year? At the beginning of the current year, Jasmine Company acquired property which contained mineral deposit. The acquisition cost of the property was P20,000,000. Geological survey indicated that 5,000,000 tons of mineral may be extracted. It is further estimated that the property can be sold for P5,000,000 following mineral extraction. The entity was legally required to restore the land to a condition appropriate for resale at a discounted amount of P2,000,000. After acquisition, the following costs were incurred: Exploration cost Development cost related to drilling of wells Development cost related to production equipment The production equipment had a useful life of 5 years and the mineral property can be fully depleted in about 8 years. The company extracted 600,000 tons of the mineral and sold 450,000 tons during the current year. 3,000,000 6,000,000 4,000,000

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