In 2019, Lepanto Mining Company purchased property with natural resources for P28,000,000. The property had...
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Accounting
In 2019, Lepanto Mining Company purchased property with natural resources for P28,000,000. The property had a residual value of P5,000,000. However, the entity is required to restore the property to the original condition at a discounted amount of P2,000,000.
In 2019, the entity spent P1,000,000 in development costs and constructed a building on the property costing P3,000,000.
The entity does not anticipate that the building will have utility after the natural resources are removed.
In 2020, an amount of P1,000,000 was spent for additional development on the mine.
The tonnage mined and estimated remaining tons are:
| Tons extracted | Tons remaining | |
| 2019 | 0 | 10,000,000 |
| 2020 | 3,000,000 | 7,000,000 |
| 2021 | 3,500,000 | 2,500,000 |
Prepare journal entries for 2019, 2020 and 2021 based on the transactions.
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