https://www.coursehero.com/tutors-problems/Mechanical-Engineering/26679328-SUBJECT-ENGINEERING-ECONOMICS-1A-mining-company-investedP25000000/

SUBJECT: ENGINEERING ECONOMICS

1. A mining company investedP25,000,000 to develop an oil well which is

estimated to contain 1,000,000 barrels of oil. During a certain year, 200,000

barrels were produced from this well. Compute the depletion charge during

the year.

ANSWER: 1. P5,000,000

2.The total gross income of the oil company in Problem P7-12 from the 200,000

barrels of oil produced is P30,000,000. The taxable income after deducting all

expenses excluding depletion is P11,800,000. Determine the allowable

depletion allowance for the year.

ANSWER: P5,900,000

3.During a certain month, a mining company has a gross income of P6,500,000

from the production of gold. The expenses for this month excluding depletion

is P4,200,000. If the fixed depletion rate for the gold is 15%, what is the

depletion allowance for this month ?

ANSWER: P975,000