In 2018, Lepanto Mining Company purchased property with natural resources for P28, 000,000.

The
property had a residual value of P5, 000,000.

However, the entity is required to restore the property to the original condition at a discounted amount
of P2, 000,000.

In 2018, the entity spent P1, 000,000 in development cost and P3, 000,000 in building on the property.

The entity does not anticipate that the building will have utility after the natural resources are removed.

In 2019, an amount of P1, 000,000 was spent for additional development on the mine.

The tonnage mined and estimated remaining tons are:

Tons extracted Tons remaining

2018 0   10,000,000
2019 3,000,000 7,000,000
2020 3,500,000 2,500,000

1. What amount should be recognized as depletion 2019?

Natural resources 28,000,000.00

Development cpst 2018 1,000,000.00

Restoration 2,000,000.00

Development cpst2019 1,000,000.00

total 32,000,000.00

Less: residual value 5,000,000.00

Depletable amount 27,000,000.00

divided by : est. extraction 10,000,000.00

Rate 2.70

Mined 2019 3,000,000

Depletion for 2019 8,100,000.00

2. What amount should be recognized as depletion 2020?

Depletable amount 27,000,000.00

less: Depletion (8,100,000.00)

Depletable amount 18,900,000.00

divided by : est.
extraction 6,000,000.00

Rate 3.15

Mined 2019 3,500,000

Depletion for 2020 11,025,000.00