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EXTRACTIVE INDUSTRIES Mine Co Ltd Stage 1 Mine Co Ltd had the following exploration and evaluation...
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
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| 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 |
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