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Look for: cost of inventory and net income - first year The Maria Makiling Mining Company purchased for 13,000,000 mining property estimated to contain 1,000,000
Look for: cost of inventory and net income - first year
The Maria Makiling Mining Company purchased for 13,000,000 mining property estimated to contain 1,000,000 tons of ore. The residual value of the property is 1,000,000. Building used in mine operations costs 1,000,000 and have an estimated life of ten years with no residual value. Mine machinery costs 2,000,000 with an estimated residual value of 400,000 after its physical life of 4 years. Following is the summary of the company's operations for the first two years: (see picture) Inventories are valued on a first-in, first-out. Depreciation on the building is to be allocated as follows: 20% to operating expenses, 80% to production. Depreciation on machinery is chargeable to production. Based on the data above, compute for the following: The cost of inventory (ore) in the first year is: The net income in the first year is: (2 Points)Step by Step Solution
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