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

Expert Solution

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

ekkarill92 answered 8 months ago

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