On January 1, 2019, Mankayan Company purchased land with valuable natural ore deposits for P10,

000,000. The residual value of the land was P2, 000,000. At the time of purchase, a geological survey
estimated a recoverable output of 4,000,000 tons.

Early in 2019, roads were constructed on the land to aid in the extraction and transportation of the
mined ore at a cost of P1, 600,000. In 2019, 500,000tons were mined and sold,

A new survey at the end of 2020 estimated 4,200,000 tons of ore available for mining. In 2020, 800,000
tons were mined and sold.

1. What amount should be recognized as depletion for 2019?

1.1 Ore Property 10,000,000.00

Road construction 1,600,000.00

Total 11,600,000.00

Less: Residual Value 2,000,000.00

Depletable Amount 9,600,000.00

Divided by: Est. Extraction 4,000,000.00

Rate 2.40

Multiply by: Mined 500,000

Depletion for 2019 1,200,000.00

2. What amount should be recognized as depletion for 2020?

1.2 Depletable amount 9,600,000.00

Less: depletion fr 2019 1,200,000.00

Depletable amount 8,400,000.00

Divided by:

(4,200,000+800K) 5,000,000.00

Rate 1.68
Multiply by: Mined in
2020 800,000.00

Depletion for 2020 1,344,000.00