Reference no: EM132877772

Question - In 2017, Yen company acquired a silver mine for 50,000. In 2018, the company constructed a road to the silver mine costing 5,000,000. Improvements and other development costs made in 2018 cost 750,000. It is estimated that the mine can be sold for 600,000 after mining activities.

During 2019, buildings were constructed near the mine to house workers at a total cost of 2,000,000. Residual value of these building amounted to 200,000

In 2020, it was estimated that 4,000,000 tons of silver ore could be removed from the mine for refining. During 2020, the first year of operations, 500,000 tons were removed from mine, 200,000 of which remained in inventory at the end of the year.

In 2021, workers mined 1,000,000 tons of silver. During the same year, geologist discovered that the mine contained 3,000,000 tons of silver ore in addition to the original 4,000,000 tons.

Development costs of 1,300,000 were made in early 2021 to facilitate removal of the additional silver. In addition, an additional building was constructed for 375,000, with insignificant residual value, 700,000 tons of silver ore were sold in 2021. FIFO method is used by the entity to measure inventory.

Required -

1. What the depletion expense reported in 2020 statement of profit or loss?

2. What the depletion expense capitalized in ending inventory as of December 31, 2021?

3. What the depreciation expense reported in 2021 statement of profit or loss?

4. What the depreciation expense capitalized in ending inventory as of December 31, 2020?