Wasting Asset

Question 1

Development Cost - for extraction
- Are all development cost considered as wasting asset?

Answer 1

Tangible → PPE
Intangible → Wasting Asset

Question 2

If silent, exploration cost must be based on Full Cost Method

Answer 2

Yes

Question 3

Output Method
- how to solve Depletion Expense?

Answer 3

Depletion Rate per unit = Depletable Amount / Estimated Units

Depletion Expense = Depletion Rate per unit x Actual Units

Depletion Expense is inventoriable (sold → COGS)

Question 4

Depreciation of Asset used in Mining
- with future use
- no future use

Answer 4

• With Future Use = Straight Line
• No Future Use = Straight Line
  XPN : LPGO (Life of Property > Wasting Asset) = Output

year of shutdown → use SL then go back to output method