__7. Information on ABC Co.s mineral resource is shown below:

Purchase price P500,000

Exploration costs 500,000

Extraction costs during the period 2,000,000

Ore extracted during the period 500,000oz

Ore sold during the period 300,000oz

At the commencement of ABCs extraction activities, it was estimated that the mineral resource has reserves of 2,000,000 ounces of ore. ABCs accounting policy is to capitalize exploration costs and subsequently measure them using the cost model. There are no ores held in inventory at the beginning of the current period.

Requirement: Compute for the following:

1. Depletion charge during the period
2. Depletion recognized as expense during the period

Changes in estimates

__8. On April 1, 20x2, ABC Co. Acquired a limestone quarry for P10,000,000. After the mineral resources are extracted, the quarry can be sold for a scrap value of P3,000,000. Additional information follows:

Estimated total reserves, tons 10,000,000

Tons quarried through 12/31/x2 4,000,000

Tons quarried on 20x3 1,500,000

Sales 5,000,000

An engineering study performed in 20x3 indicated that as of January 1, 20x3, 7,500,000 tons of limestone were available.

Requirement: How much is the depletion in 20x3?

Depreciation of mining equipment

__9. On July 1, 20x1, Minero Co. acquired a mine for P13,000,000. After extraction, the land can be sold for P400,000. Estimated reserves were 1,600,000 tons. Minero expects to extract and sell 25,000 tons per month. Minero purchased new equipment on July 1, 20x1. The equipment cost P6,000,000 and had a useful life of 8 years. However, after all the resource is removed, the equipment will be of no use and will be sold for P200,000.

Requirements: Compute for the following:

1. Depletion for the year ended December 31,20x1
2. Depreciation for the year ended December 31, 20x1