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What should be the charge to depletion expense per ton

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Reference no: EM132789261

Question - Percy Resources Company acquired a tract of land containing an extractable mineral resource. Percy is required by its purchase contract to restore the land to a condition suitable for recreational use after it has extracted the mineral resource. Geological surveys estimate that the recoverable reserves will be 2,000,000 tons, and that the land will have a value of P 1,200,000 after restoration. Relevant cost information follows:

Land P9,000,000

Estimated restoration costs 1,800,000

If Percy maintains no inventories of extracted material, what should be the charge to depletion expense per ton of extracted material?

a. P4.80

b. P3.90

c. P4.50

d. P5.40

Reference no: EM132789261

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