Problem 1

Acquisition cost 164,000.00

Exploration cost -
Development cost -
Restoration Cost -
Capitalizable Cost 164,000.00
Less: Residual Value -
Depletable Amount 164,000.00
Est. number of output to be extracted 20,000.00
Depletion rate per ton 8.20
Actual number of tons extracted 4,000.00
Depletion expense - 2018 32,800.00

2019
Revision of estimate:
Cost 164,000.00
Accumulated depletion (32,800.00)
Carrying amount 131,200.00
Revised remaning estimate 20,000.00
Revised depletion rate 6.56
Actual number of tons extracted 8,000.00
Depletion expense - 2019 52,480.00
Problem 2

Acquisition cost 8,000,000.00

Exploration cost 12,000,000.00
Development cost 10,000,000.00
Restoration cost -
Capitalizable cost 30,000,000.00
Less: Residual value (900,000.00)
Depletable amount 29,100,000.00
Est. number of units to be extracted 4,000,000.00
Depletion rate per unit 7.28
Actual units extracted 2015-2017 400,000.00
Accumulated depletion 2015-2017 2,910,000.00

Cost 30,000,000.00
Accumulated Depletion (2,910,000.00)
Carrying Amount as of Dec 31, 2017 27,090,000.00
Revised residual value (600,000.00)
Depletable amount 26,490,000.00
Revised remaining estimate 500,000.00
Revised depletion rate 52.98
Actual units extracted in 2018 200,000.00
Depletion expense - 2018 10,596,000.00

Cost 30,000,000.00
Less: Accumulated Depletion (13,506,000.00)
Carrying amount - December 31, 2018 16,494,000.00
Problem 3

Development Cost
1. Intangible development - ex. Drilling, wells - Capitalizable cost of wasting asset subject to depletion.
2. Tangible development - ex. Heavy machinery, tunnels, etc
Movable - can be used in other mining operation projects - Straight line method of depreciation based on its E
Immovable - shorter between its own useful life or useful life of wasting asset
If EUL of immovable is shorter - Straight line method of depreciation
If EUL of wasting asset is shorter - Output method similar to depletion of wasting asset

Question 1: Depletion expense - 2018

Acquisition cost 4,000,000.00 Tangible development: PPE
Exploration cost 6,000,000.00 Movable 2,000,000.00
Development cost 5,000,000.00 Immovable 1,000,000.00
Restoration cost -
Capitalizable cost 15,000,000.00
Resdiual value -
Depletable amount 15,000,000.00
Est. units to be extracted 4,000,000.00
Depletion rate per unit 3.75
Actual units extracted 500,000.00
Depletion expense - 2018 1,875,000.00

Question 2. Depreciation of Movable equipment

Cost 2,000,000.00
Resdiual value -
Depreciable amount 2,000,000.00
Estimated Useful Life 10.00 straight-line method
Annual depreciation 200,000.00

Question 2. Depreciation of Immovable equipment

Shorter between
EUL of immovable property 5 years shorter! Use straight-line method of depreciation
Life of wasting asset
Total units to be extracted 4,000,000.00
Units to be extracted every year 400,000.00
Life of wasting asset 10 years

Cost 1,000,000.00
Resdiual value -
Depreciable amount 1,000,000.00
Estimated Useful Life 5.00 straight-line method
Annual depreciation 200,000.00
preciation based on its EUL

d of depreciation
Problem 4

Development Cost
1. Intangible development - ex. Drilling, wells - Capitalizable cost of wasting asset subject to depletion.
2. Tangible development - ex. Heavy machinery, tunnels, etc
Movable - can be used in other mining operation projects - Straight line method of depreciation based on its E
Immovable - shorter between its own useful life or useful life of wasting asset
If EUL of immovable is shorter - Straight line method of depreciation
If EUL of wasting asset is shorter - Output method similar to depletion of wasting asset

Question 1: Depletion expense - 2018

Acquisition cost 4,000,000.00 Tangible development: PPE
Exploration cost 6,000,000.00 Movable 2,000,000.00
Development cost 5,000,000.00 Immovable 1,000,000.00
Restoration cost -
Capitalizable cost 15,000,000.00
Resdiual value -
Depletable amount 15,000,000.00
Est. units to be extracted 4,000,000.00
Depletion rate per unit 3.75
Actual units extracted 500,000.00
Depletion expense - 2018 1,875,000.00

Question 2. Depreciation of Movable equipment

Cost 2,000,000.00
Resdiual value -
Depreciable amount 2,000,000.00
Estimated Useful Life 20.00 straight-line method
Annual depreciation 100,000.00

Question 2. Depreciation of Immovable equipment

Shorter between
EUL of immovable property 10 years
Life of wasting asset
Total units to be extracted 4,000,000.00
Units to be extracted every year 500,000.00
Life of wasting asset 8.00 shorter! Use output method of depreciation

Cost 1,000,000.00
Residual value -
Depreciable amount 1,000,000.00
Est. number of units to be extracted 4,000,000.00 use output method, since the life of wasting asset is sho
Depreciation rate per unit 0.25
Actual units extracted - 2018 500,000.00
Depreciation expense - 2018 125,000.00
preciation based on its EUL

depreciation
e of wasting asset is shorted that its EUL
Problem 5
Acquisition cost 60,000,000.00
Exploration cost -
Development cost -
Restoration cost -
Capitalizable cost 60,000,000.00
Resdiual value -
Depletable amount 60,000,000.00
Est. units to be extracted 2,000,000.00
Depletion rate per unit 30.00
Actual units extracted 2015-2017 620,000.00
Accumulated Depletion - 2017 18,600,000.00

2018 - Employee strike! No output

Depletion expense -

Question 2. Depreciation of Immovable tangible equipment

Shorter between:
Life of immovable equipment 15.00
Life of wasting asset (operation)
Total units to be extracted 2,000,000.00
Units to be extracted every y 200,000.00
Life of wasting asset 10.00 years output method

Cost 5,000,000.00
Residual value -
Depreciable amount 5,000,000.00
Est. number of units to be extracted 2,000,000.00
Depreciation rate per unit 2.50
Actual units extracted 2015-2017 620,000.00
Accumulated Depreciation - 2017 1,550,000.00

2018 - Employee strike! No output

PAS16 - temporary idle PPE is still subject to depreciation
Since output method is not applicable - shift to SLM (change in depreciation method)

Cost 5,000,000.00
Less: Accumulated depreciation (1,550,000.00)
Carrying amount - 2017 3,450,000.00
Remaining life 12.00
Depreciation expense - 2018 287,500.00

2019: Operation was resumed

Depletion expense - 2019
Depletion rate per unit 30.00
Actual units extracted - 2019 150,000.00
Depletion expense - 2019 4,500,000.00

Depreciation expense of immovable equipment

since the operation is resumed, go back to output method of depreciation

Cost 5,000,000.00
Less: Accumulated depreciation (1,837,500.00)
Carrying amount - 2018 3,162,500.00
Remaining units to be extractedq 1,380,000.00
New Depreciation rate per unit 2.29
Actual units extracted - 2019 150,000.00
Depreciation expense - 2019 343,750.00