11/27/21, 4:08 PM Accounting for Wasting Assets

Accounting for Wasting Assets

Total points 31/40

Prepared by: Jhon Cydric Tiosayco

The respondent's email (s.delapena.crystaljay@cmu.edu.ph) was recorded on submission

of this form.

0 of 0 points

Name *

Crystal Jay Dela Pena

Section Code *

MA2

Email address *

s.delapena.crystaljay@cmu.edu.ph

GENERAL INSTRUCTIONS 0 of 0 points

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READ ME! Para Sure Sure aron di ka masakitan ^_^

For the question asking for amounts

answer in the following format examples

P1,000,000

P1,234,567.89

For the Questions asking for Journal Entry

Answer in the following format examples

Dr. Wasting Assets 1,000,000; Cr. Cash 1,000,000

Dr. Wasting Assets 1,000,000, Heavy Equipment 1,000,000; Cr. Cash 1,900,000, Decommissioning
Liability 100,000

"For Journal Entries that has decimals round off to nearest Ones place"

This Drill is good for 2 hours and 30 mins. to increase the challenge, try to time yourself to asses your
level of speed and accuracy.

Part 1: Initial Measurement 8 of 8 points

Initially measured at Cost

Problem 1

HAGBA ANG ALL CO. have the right to explore the Gold Deposit in the 1,000
acres of land with the price of P18,900,000 at the beginning of the year.
Additional costs are as follows; Exploration Cost of P10,900,000 incurred on
March 1. On March 16, Heavy Equipment was purchased with a cost of
P7,000,000, and intangible development cost was incurred to for drilling
costing P8,765,000. April 15, Geologist expects that 5,100,000 Tons will be
extracted from the site and 340,000 tons are expected to be exhausted every
year and paid for P500,000 for the geological studies. As per contract
stipulation included at the acquisition, HAGBA ANG ALL CO. needs to restore
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p q ,
the land on it's original state at the cost of P5,000,000 (Effective rate as of
date is 9%) . On December 31, the asset is ready for Exploration and has a
residual value P5,600,000.Company uses Full-cost method.
Answer the following Questions based on the given problem

How much is the Cost of the Wasting Asset? 1/1

P40,437,690.21

How Much is the Depletable Cost? 1/1

P34,837,690.21

PREPARE JOURNAL ENTRIES FOR THE INITIAL MEASUREMENT

Round off to the nearest ones, Use Wasting Assets to record for the Asset

Journal Entry 1 2/2

Dr. Wasting Assets 20,272,690; Cr. Cash 18,900,000, Decommissioning Liability

1,372,690

Journal Entry 2 (put N/A if not Possible) 1/1

Dr. Wasting Assets 10,900,000; Cr. Cash 10,900,000

Journal Entry 3 (put N/A if not Possible) 1/1

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Journal Entry 3 (put N/A if not Possible) 1/1

Dr. Wasting Assets 8,765,000, Heavy Equipment 7,000,000; Cr. Cash 15,765,000

Journal Entry 4 (put N/A if not Possible) 1/1

Dr. Wasting Assets 500,000; Cr. Cash 500,000

Journal Entry 5 (put N/A if not Possible) 1/1

N/A

Part 2: Depletion and Change Estimate 9 of 11 points

Subsequently Measured at cost or at Revaluation model.

Problem 2

Cris wants to prove his love to Cydric, his company purchased a land with a
Gold Deposit because he wants to sell gold in honor for his BABY. Land was
acquired at a cost of P15,600,000 on November 1, 2021. As part of Company's
policy that all exploration cost is capitalizable to the cost of the wasting asset,
Exploration cost was incurred on November 30 costing P12,000,000. Total
Development Cost incurred on December 1, costing P20,500,000 and 67% of
it was used for Intangible Development cost. Cris expects to sell the land after
all the Gold deposits are exhausted for P3,000,000 after incurring cost of
P350,000 because the buyer will not buy if the land was not restored.
Geologist was paid P300,000 to study the area and estimated that 2,000,000
tons of gold will be extracted On 2022 extraction of 400 000 tons was
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tons of gold will be extracted. On 2022 extraction of 400,000 tons was
happened.
Answer the Following Based on the problem

Total Depletion for the year 2022 0/1

Journal Entry for the Year end 2022 0/1

1. Assumed that on 2023 the following information was gathered. Additional

Intangible Development cost were Incurred P4,500,000 in Jan 1. On Dec 31,
The Estimated remaining tons to be extracted was 1,600,000 tons and
200,000 Tons were successfully extracted.
Compute the following using this additional Information

New Depletable Amount 1/1

P35,688,000

Amount to be added to the inventory for the year 2023 1/1

P3,965,333.33

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Journal Entry for Dec 31, 2023 (round off to nearest ones) 1/1

Dr. Depletion 3,965,333; Cr. Accumulated Depletion 3,965,333

2. Assumed that on 2023, The residual value of the Land Changes to

P2,500,000 and cost of disposal for P500,000. The same Estimations and
Actual extracted from 2022

Depletion for the year 2023 1/1

P6,367,600

Journal Entry for Dec 31, 2023 1/1

Dr. Depletion 6,367,600; Cr. Accumulated Depletion 6,367,600

3. Assumes.. its years 2023 -2024 (typo)

Depletion for 2023 1/1

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P8,459,500

Depletion for 2024 1/1

P8,121,120

Accumulated Depletion at the end of 2024 2/2

P24,377,620

Part 3: Depreciation of Mining Equipment 6 of 13 points

PROBLEM 3

In 2021, NAG LISOD Co. purchased real estate containing copper for a total
cost of ₱64,000,000. Exploration costs amounted to ₱4,000,000 and
intangible development costs of drilling, tunnels, shafts, and wells
totaled₱16,000,000. Movable tangible equipment costs for heavy equipment
totaled₱32,000,000 and immovable tangible equipment costs for drilling rig
foundation totaled ₱24,000,000.Estimated recoverable reserves from the
mine are 2,100,000 units. It is estimated that 300,000 units will be extracted
each year.

1. The heavy equipment and the drilling rig foundation have estimated useful
lives of 10 years and 5 years, respectively. Actual units extracted during 2021
are 320,000 units.

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Depreciation Expense of Heavy Equipment 1/1

P3,200,000

Depreciation Expense of Drill Rig Foundation 1/1

P4,800,000

Depletion for 2021 1/1

P12,800,000

Journal Entry (Depreciation) 0/2

Journal Entry (Depletion) 0/1

2. The heavy equipment and the drilling rig foundation have estimated useful
lives of 20 years and 10 years, respectively. Actual units extracted during 2021
are 320,000 units.

Carrying Amount of the Heavy Equipment on 2021 1/1

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Carrying Amount of the Heavy Equipment on 2021 1/1

P30,400,000

Total Depreciation of PPE for 2021 0/1

3. Assumes that the actual units extracted from 2021 through 2023 totaled
340,000 units. No units were extracted during 2024 due to an employee
strike. Extraction resumed in2025 and total units extracted during that year
was 80,000 units. The useful life of both equipment is 10 years and has 10%
residual Value

Depreciation Expense of Heavy Equipment on 2024 1/1

P2,880,000

Depreciation Expense of Immovable Equipment on 2024 0/1

Total Depreciation Expense of Both Equipment in 2025 1/1

P3,585,306.12

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Carrying Amount of the PPE on 2025 0/2

P17,600,000

Part 4: Liquidating Dividend 1 of 1 points

Problem 4
14. MYNHEER MISTER Co. has the following balances in its accounts as of

December 31, 2021:

Resource deposit – coal mine 35,000,000

Accumulated depletion 16,000,000

Ordinary share capital 80,000,000

Capital liquidated 8,000,000

Unappropriated retained earnings 20,000,000

Inventory (600,000 units) 28,000,000

Depletion rate per unit 6.00 per unit

How much is the maximum amount that can be declared as dividends? 1/1

P24,400,000

COMPREHENSIVE PROBLEM 7 of 7 points

Problem 5

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Babe Mining Co. Owned by Mr. Kalot

Additional Information: The P800,000 development cost is allotted for drilling

Tunnels. The Heavy Equipment was Purchased on March 31, 2019 and is ready
for use. The Equipment's Residual Value is P700,000 at estimated life of 10
years. Cost Model Under SYD

Initial Measurement of the Wasting Asset 1/1

P19,800,000
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How much is the total of depletion and depreciation in 2019? Round off 1/1
to the nearest whole number

P313,636

How much is the depletion in 2020? Round off to the nearest whole 1/1
number

P5,550,000

How much is the depletion in 2021? Round off to the nearest whole 1/1
number

P6,134,211

How much is the depletion in 2022? Round off to the nearest whole 1/1
number

P5,633,401

How much is the difference between the depreciation expense 2/2

measured by Double Declining Method Less the Depreciation Expense
measured at SYD of the heavy Equipment in 2024? (Round off to the
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nearest whole number)

P10,649

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