Reference no: EM132937108

Questions -

Q1) In January 2018 PM Corporation purchased a mineral mine for P14,400,000 with removable ore estimated by geological surveys at 8,640,000 tons. The property has an estimated value of P1,440,000 after the ore has been extracted. The company incurred P4,320,000 of intangible development costs in preparing the property for the extraction of ore. During 2020, 1,080,000 tons were removed and 960,000 were sold. For the year ended December 31, 2020, how much should the company include as depletion in its cost of goods sold?

Q2) On January 1, 2020, Banana Co. entered into a contract to acquire a new machine for its factory. The machine, which had a cash price of P300,000, was paid for as follows: Down payment P30,000; Note payable in 10 equal monthly installments P240,000; 1,000 shares of Banana Co. ordinary shares with an agreed value of P50 per share: P50,000 Total P320,000. Prior to the machine's use, installation costs of P8,000 were incurred. The machine has an estimated useful life of 10 years and salvage value of P10,000. What should the company record as depreciation expense for the first year under the straight line method?