Question

EXTRACTIVE INDUSTRIES Mine Co Ltd Stage 1 Mine Co Ltd had the following exploration and evaluation costs. Silver Mica $500,000 $350,000 Exploration Costs Evaluation Costs $200,000 $200,000 On June 30, 2019 Mine Co. Ltd concluded their search and found that Mica did not contain any commercially viable quantities of resources and therefore abandoned the area. Stage 2 During the year ended June 30, 2019, minerals were discovered at site Silver. Costs to develop the site are split between property, plant and equipment 70% and intangible assets 30%. Further costs to develop the site include another $500,000. Stage 3 On July 1, 2020 and the mine went into production stage of its operations Provide the journals for stage 1,2 and 3 of Mine Co's operations using the Area of Interest Method. Narrations are not required

Answer 1

Stage 1.
Costs	Silver	Mica
Exploration	$           500,000	$        350,000
Evaluation	$           200,000	$        200,000
Total	$           700,000	$        550,000
Stage 2.	Silver
Total Cost incurred	$           700,000
PPE @70%	$        490,000.0
Intangible Assets @30%	$        210,000.0
Further cost	$           500,000
PPE @70%	$           350,000
Intangible Assets @30%	$           150,000

	Journal Entries
Stage	Account Title	Dr $	Cr $
1	Exploration & Evaluatrion Assets-Good Site	$           700,000
	Exploration & Evaluatrion Assets-Bad Site	$           550,000
	Cash		$     1,250,000
June 30.	Impairment Loss-Exploration & Evaluation Assets	$           550,000
	Exploration & Evaluatrion Assets-Bad Site		$        550,000

Stage 2.	Assets Under Construction-Property , Plant & Equipment (Good Site)	$        490,000.0
	Assets Under Construction-Intangible Assets (Good Site)	$        210,000.0
	Exploration & Evaluatrion Assets-Good Site		$        700,000
	Assets Under Construction-Property , Plant & Equipment (Good Site)	$           350,000
	Assets Under Construction-Intangible Assets (Good Site)	$           150,000
	Cash		$        500,000

Stage 3.	Property , Plant & Equipment (Good Site)	$        840,000.0
	Intangible Assets (Good Site)	$        360,000.0
	Assets Under Construction-Property , Plant & Equipment (Good Site)		$    840,000.0
	Assets Under Construction-Intangible Assets (Good Site)		$    360,000.0