PROBLEMS Problem 28-5 (LAA) Problem 28-13 (AICPA Adapted) Problem 28-1 (LAA) On January 1, 2020, Multinational Company was organized with Resource Company was engaged in the rock and gravel business an authorized share capital of P10,000,000 consisting of 100,000 In 2019, Lepanto Mining Company purchased property The following transactions relate to the acquisition and shares of P100 par value, one half of which was immediately with natural resources for P28,000,000. The property had residual value of P5,000,000. development of an extensive gravel pit: sold for cash at P110 per share. 2020 However, the entity is required to restore the property In February, the entity acquired a tract of resource land at Cost of acquisition and development P2, 000,000. to the original condition at a discounted amount of 960,000 cost of P3,000,000 which was paid in cash. Estimated output 2,400,000 tons Production 1,000,000 tens Also, the entity purchased for cash mining equipment of In 2019, the entity spent P1,000,000 in development cost 2021 P800,000. and constructed a building on the property costing Additional development cost 490,000 P3,000,000. Production 600,000 KEA The geological survey of the resource property indicated an 2022 estimated content of 1,000,000 units. The entity does not anticipate that the building will have utility after the natural resources are removed. Additional development cost 500.000 - New estimate of remaining output 2,500,000 tom During the year ended December 31, 2020, the entity mined In 2020, an amount of P1,000,000 was spent for additional Production 700,000 tora 90,000 units, of which 85,000 units were sold for a cash price of P50 per unit. development on the mine. Required: The tonnage mined and estimated remaining tons are: Prepare journal entries for 2020, 2021 and 2022. The entity paid the following during the year. Tons extracted Tons remaining Problem 28-4 (TAA) Mining labor and other direct costs 2,268,000 10,000,000 Reliable Company purchased a tract of resource land in 2020 Administrative expenses 500,000 2019 0 7,000,000 (9DA) 2020 3,000,000 2,500,000 for P3,960,000. The content of the tract, was estimated at 120,000 units. When the resource has been exhausted, it is estimated Required: 2021 3,500,000 that the land will be worth P120,000. * L. What amount should be recognized as depletion for 2020? a. . Prepare journal entries including adjustments to record the Building was set up at a cost of P960,000 and heavy equipment was purchased in early January 2020 for P1,240,000. The useful transactions. 6,900,000 life of the building is 8 years and the useful life of the equipment b. Prepare an income statement for the year ended December b. 9,600,000 is 4 years. 31, 2020. c. 8,100,000 In 2020, 12,000 units have been extracted. This was one half of d. 8,400,000 the annual extraction which can be expected following the first c. Prepare a statement of financial position on December 31 What amount should be recognized as depletion for 20217 year of operations. In 2021, 25,000 units were extr 2020 d. Compute the maximum dividend that can legally be declared . 10,150,000 Required: by the entity on December 31, 2020. b. 11,025,000 Prepare journal entries to record transactions relating to the . Prepare journal entry assuming the maximum dividend c. 15,750,000 resource property for 2020 and 2021. d. 9,450,000 declared by the entity Problem 29-3 (ACP) PROBLEMS Problem 29-1 (ACP) Maroon Company provided the following data on the date of revaluation: Hilarious Company provided the following data pertaining to a machinery on the date of revaluation: Building, at original cost Building, at fair value 5,000,000 Cost Replacement cost 6,000,000 Machinery 4,500,000 Accumulated depreciation 7,200,000 Accumulated depreciation - cost 900,000 40-year life and 10 years expired Age of asset 3 years 1,250,000 Required: Required: 1. What is the original useful life of the asset? 1. Prepare journal entries for the current year under the 2. Prepare journal entry to record the revaluation. proportional approach. 3. Prepare journal entry to record the annual depreciation subsequent to revaluation. 2. Prepare journal entries for the current year under the Prepare journal entry to record the piecemeal realization elimination approach. of the revaluation surplus