Problem 30-3

Date Particulars Debit Credit

2023 Wasting asset 5,400,000
Cash 5,400,000

Wasting asset 450,000

Estimated liability 450,000

Mine improvement 8,000,000

Cash 8,000,000

2024 Depletion (600,000 x 2.60) 1,560,000

Accumulated depletion 1,560,000

Cost 5,850,000
Less: Residual value 650,000
Depletable amount 5,200,000
Divided by estimated output 2,000,000
Depletion rate per unit 2.60

Depreciation (600,000 x 4) 2,400,000

Accumulated depreciation 2,400,000

Cost 8,000,000
Divided by estimated output 2,000,000
Depreciation rate per unit 4

2025 Mine improvement 770,000

Cash 770,000

Depletion (400,000 x 1.6) 640,000

Accumulated depletion 640,000

Cost (5,400,000 + 450,000) 5,850,000

Less: Accumulated depletion 1,560,000
Carrying amount - 2025 4,290,000
Less: Residual value 650,000
Depletable amount 3,640,000
Divided by estimated tons to be extracted (400,000 + 2,275,000
1,875,000)
New depletion rate 1.6

Depreciation (400,000 x 2.8) 1,120,000

Accumulated depreciation 1,120,000

Cost 8,000,000
Add: Additional bunk houses 770,000
Total 8,770,000
Less: Accumulated depreciation 2,400,000
Carrying amount 6,370,000
Divided by estimated tons to be extracted 2,275,000
New depreciation rate 2.8
Problem 30-4
Cost 2,800,000
Divided by estimated output 500,000
Depreciation rate per unit 56

Depreciation for first year (100,000 x 56) 560,000

Depreciation for second year (100,000 x 56) 560,000
Accumulated Depreciation for second year 1,120,000

Cost 2,800,000
Less: Accumulated Depreciation 1,120,000
Carrying amount - Beginning of third year 1,680,000
Divided by remaining useful life 8
Depreciation for third year 210,000

Accumulated Depreciation 1,120,000

Add: Depreciation - 3rd year 210,000
Accumulated Depreciation - 3rd year 1,330,000

Cost 2,800,000
Less: Accumulated Depreciation - 3rd year 1,330,000
Carrying amount - Beginning of fourth year 1,470,000

Estimated production 500,000

Less: Extracted in prior years (100,000 + 100,000) 200,000
Remaining estimate of deposit 300,000

New Depreciation rate (1,470,000/300) 4.9

Depreciation for 4th year (100,000 x 4.9) 490,000

Depreciation of Building for first year 560,000

Depreciation of Building for second year 560,000
Depreciation of Building for third year 210,000
Depreciation of Building for fourth year 490,000

Problem 30-5
Date Particulars Debit Credit
2023
Jan. 1 Cash (50,000 x 110) 5,500,000
Share capital (50,000 x 100) 5,000,000
Share premium 500,000
Proceeds of issued shares

Feb. 1 Land 3,000,000

Cash 3,000,000
Acquisition of land

Mining equipment 800,000

Cash 800,000
Acquisition of mining equipment

Mining labor and other cost 2,268,000

Administrative expense 500,000
 Cash 2,768,000
To record for expenditures incurred

Dec. 31 Cash (85,000 x 50) 4,250,000

Sales 4,250,000
Units sold

Depletion 270,000
Accumulated depletion 270,000
To record for depletion of land

Cost 3,000,000
Divided by estimated content 1,000,000
Depletion rate per unit - Land 3

Depletion (90,000 x 3) - 2023 for Land 270,000

Depreciation 72,000
Accumulated depreciation 72,000
Deprecation of mining equipment

Cost 800,000
Divided by estimated content 1,000,000
Depreciation rate per unit - mining equipment 0.8

Depreciation (90,000 x 0.8) - 2023 for Mining equipment 72,000

Inventory (5,000 x 29) 145,000

Profit or loss 145,000
To record the inventory at year-end

Mining labor and other cost 2,268,000

Add: Depletion 270,000
Depreciation 72,000 342,000
Total 2,610,000
Divided by number of units extracted 90,000
Unit cost 29

Units extracted 90,000

Less: Units sold 85,000
Remaining units unsold 5,000

B.
Multinational Company
Statement of Profit and Loss
December 31, 2023
Sales 4,250,000
Less: Cost of goods sold
Mining labor and other direct cost 2,268,000
Depletion 270,000
Depreciation 72,000
Total production cost 2,610,000
Less: Inventory, Dec. 31 145,000 2,465,000
 Gross income 1,785,000
Less: Administrative expense 500,000
Net income 1,285,000

C.
Multinational Company
Statement of Financial Position
December 31, 2023
ASSET
Current assets:
Cash 3,182,000
Inventory 145,000 3,327,000 3,327,000

Non-current assets
Land 3,000,000
Less: Accumulated depletion 270,000 2,730,000
Mining equipment 800,000
Less: Accumulated depreciation 72,000 728,000 3,458,000
Total Assets 6,785,000

Equity
Share capital 5,000,000
Share premium 500,000
Retained earnings 1,285,000
Total equity 6,785,000

D.
Retained earnings 1,285,000
Add: Accumulated depletion 270,000
Total 1,555,000
Less: Unrealized depletion in ending inventory (5,000 x 3) 15,000
Maximum dividend 1,540,000

E.
Retained earnings 1,285,000
Capital liquidated 255,000
Dividend payable 1,540,000
Declaration of dividend