1st Departmental Quiz - Wasting Assets

Item 1 of 12
6 Points

窗体顶端

Fill in the blanks / identification:

JEBZ Company purchased a resource property. JEBZ is required to restore the property at the end
of extraction to a condition that is fit for leisure activities. Surveys estimate that the entity can extract
a total of 3,000,000 tons and mining may be completed for 8 years. The entity mined 350,000 tons
and sold 300,000 tons during its first year of operations. Other information follows:

Acquisition cost for the P

property 15,000,000
Exploration and development
3,500,000
costs
Movable mining equipment
2,000,000
having a useful life of 5 years
Building constructed near the
mine location that is directly
related in the mining 500,000
operations with useful life of
10 years
Undiscounted costs to restore
2,000,000
the land
Credit-adjusted risk-free
8%
interest rate

Round off PV factors to 4 decimals. Round off depletion/depreciation rate per unit to 2 decimals.

Also during the year, the entity incurred total labor and production overhead of P10,000,000.

Administrative and marketing costs amounted to P7,000,000.

Compute for the total production costs during the first year. 12343833

Compute for the costs of production charge to profit or loss during the period. 10580428

Compute for the costs of production included in the balance sheet at the end of year 1. 1763405
窗体底端
Item 2 of 12
2 Points

窗体顶端
Statement 1: During the year, the entity incurred exploration expenditures but have not obtained yet
permit from the government. The entity cannot apply the provisions of IFRS 6 for the expenditures
 incurred. True
Statement 2: When there is a change in the accounting estimate, i.e., the expected number of
mineral reserves to be extracted, the balances of the earliest period presented in a comparative
financial statements are adjusted to reflect the change. False
Statement 3: The entity is prohibited to change its accounting policy for exploration and evaluation
expenditures. False
Statement 4: In developing accounting policies for exploration and evaluation activities, the entity is
required to consider the requirements and guidance in Standards and Interpretations dealing with
similar and related issues. False

Select the correct response:

 Statements 1 and 3 are correct

 Only the 1st statement is correct.
 Only the 3rd statement is correct
 Statements 1 and 2 are correct
 Statements 2 and 4 are correct
 Statements 1 and 4 are correct
 Only the 4th statement is correct
 Statements 1, 2 and 4 are correct
 All statements are actually correct
 Only the 2nd statement is correct.
窗体底端
Item 3 of 12
1 Point

窗体顶端
Statement 1: Exploitation and evaluation cost is the cost incurred in an attempt to locate the natural
resource that can economically be extracted or exploited. False
Statement 2: The discounted estimated restoration cost is capitalized as part of the depletable cost of
a wasting asset. True

Select the correct response:

 Only the 1st statement is correct.

 Both statements are incorrect.
 Only the 2nd statement is correct.
 Both statements are correct.

窗体底端
Item 4 of 12
8 Points

窗体顶端

Fill in the blanks / identification:

JEBZ Company purchased a resource property. JEBZ is required to restore the property at the end
of extraction to a condition that is fit for leisure activities. Surveys estimate that the entity can extract
a total of 3,000,000 tons and mining may be completed for 8 years. The entity mined 350,000 tons
during its first year of operations. Other information follows:
Acquisition cost for the P
property 15,000,000
Exploration and development
3,500,000
costs
 Movable mining equipment
2,000,000
having a useful life of 5 years
Building constructed near the
mine location that is directly
related in the mining 500,000
operations with useful life of
10 years
Undiscounted costs to restore
2,000,000
the land
Credit-adjusted risk-free
8%
interest rate

Round off PV factors to 4 decimals. Round depletion/depreciation rate to 2 decimals.

Compute the depletion rate per unit during the first year of operations (Do not use peso sign and
comma). 6.53
Compute for the carrying amount of the resource property at the end of year 1. 17295100

Assuming the entity, on its second year of operations, obtained additional information that the
resource property contained an additional 600,000 tons of minerals and that the entity has mined
400,000 tons in year 2.
Compute the depletion in year 2 (Round to whole numbers).
Compute the depreciation in year 2 (Round to whole numbers).
窗体底端
Item 5 of 12
1 Point

窗体顶端
Statement 1: Depletion of the wasting asset including the depreciation of building used in
administrative purposes are usually inventoriable costs. False
Statement 2: The depletable amount of the wasting asset is divided by the units estimated to be
extracted to obtain the depletion rate per unit. True

Select the correct response:

 Only the 1st statement is correct.

 Only the 2nd statement is correct.
 Both statements are correct.
 Both statements are incorrect.

窗体底端
Item 6 of 12
1 Point

窗体顶端
Statement 1: When there is a change in expected number of units to be extracted during the second
year of production of minerals, the entity normally computes for the depletion for the second year by
dividing the remaining depletable amount as of end of year 1 by the remaining number of units of
minerals expected to be extracted as of beginning of year 2 based on the revised estimates. True
Statement 2: The depreciation of tangible mining equipment is sustained although the entity has not
mined minerals during a certain period. True
Statement 3: The depletion of mining resource is sustained although the entity has not mined
 minerals during a certain period. False
Statement 4: A permit to explore and mine mineral resource from the government is mandatory
because what is at stake is the future of mother earth and its inhabitants. True

Select the correct response:

 Statements 1,3 and 4 are correct

 Only the 4th statement is correct
 All statements are actually correct
 Statements 2 and 4 are correct
 Only the 2nd statement is correct.
 Only the 1st statement is correct.
 Only the 3rd statement is correct
 Statements 1, 2 and 4 are correct
 Statements 2, 3 and 4 are correct
 Statements 3 and 4 are correct

窗体底端
Item 7 of 12
4 Points

窗体顶端

Fill in the blanks / identification:

JEBZ Company purchased a resource property. JEBZ is required to restore the property at the end
of extraction to a condition that is fit for leisure activities. Surveys estimate that the entity can extract
a total of 3,000,000 tons and mining may be completed for 8 years. The entity mined 350,000 tons
during its first year of operations. Other information follows:
Acquisition cost for the P
property 15,000,000
Exploration and development
3,500,000
costs
Movable mining equipment
2,000,000
having a useful life of 5 years
Building constructed near the
mine location that is directly
related in the mining 500,000
operations with useful life of
10 years
Undiscounted costs to restore
2,000,000
the land
Credit-adjusted risk-free
8%
interest rate

Round off PV factors to 4 decimals. Round depletion/depreciation rate to 2 decimals.

Compute the depreciation during the first year of operations (round to whole numbers. Do not use
peso sign and comma). 458333
Compute for the carrying amount of the building at the end of year 1. 441667

窗体底端
 Statement 1: The depreciation of tangible equipment used in mining operations is based on the
useful life or economic life of the mining equipment, whichever is shorter. False
Statement 2: An exploration and evaluation asset shall be measured initially at its fair value. False

Select the correct response:

 Only the 2nd statement is correct.

 Both statements are incorrect.
 Only the 1st statement is correct.
 Both statements are correct.

Item 9 of 12
2 Points

窗体顶端

Fill in the blanks / identification:

JEBZ Company purchased a resource property. JEBZ is required to restore the property at the end
of extraction to a condition that is fit for leisure activities. Surveys estimate that the entity can extract
a total of 3,000,000 tons and mining may be completed for 8 years. Other information follows:
Acquisition cost for the P
property 15,000,000
Exploration and development
3,500,000
costs
Movable mining equipment
2,000,000
having a useful life of 5 years
Building constructed near the
mine location that is directly
related in the mining 500,000
operations with useful life of 10
years
Undiscounted costs to restore
2,000,000
the land
Credit-adjusted risk-free
8%
interest rate

Round off PV factors to 4 decimals.

Compute the initial carrying amount of the resource property (round to the nearest whole number. Do
not use peso sign and comma). 19580600
窗体底端
Item 10 of 12
1 Point

窗体顶端
Statement 1: An entity is required to recognize exploration and evaluation expenditures as an asset
when such expenditure is recoverable in the future. False
Statement 2: Normally, companies compute depletion on an output basis. True

Select the correct response:

 Only the 2nd statement is correct.

 Both statements are correct.
 Only the 1st statement is correct.
 Both statements are incorrect.

窗体底端
Item 11 of 12
1 Point

窗体顶端
Statement 1: Tangible development costs and restoration costs are part of the depletion base. False
Statement 2: Wasting assets are actually natural resources, which are physically consumed and can
only be replaced by the act of nature. True

Select the correct response:

 Both statements are correct.

 Only the 2nd statement is correct.
 Only the 1st statement is correct.
 Both statements are incorrect.

窗体底端
Item 12 of 12
2 Points

窗体顶端
Statement 1: An entity treats exploration and evaluation assets as a regular assets and are not
separated from other non-current assets when presenting in the statement of financial position. This
is clearly illustrated in the case of Lepanto Consolidated Mining financial statements.
Statement 2: The entity is also required to disclose in its financial statements about the quantity of
mineral reserves expected to be extracted from a resource property.
Statement 3: Based on Lepanto's 2020 financial statements, the company has accounted exploration
expenditures as asset in accordance to its adopted accounting policy.

Select the correct response:

 All statements are incorrect

 Only the 2nd statement is correct.
 Only the 3rd statement is correct
 All statements are correct
 Only the 1st statement is correct.
 Two statements are correct

窗体底端