Epson Mining Ltd Has Economically Recoverable Reserves of 3 Million

question 2

Multiple Choice

Epson Mining Ltd has economically recoverable reserves of 3 million tonnes of ore.In discovering and developing its mine it has spent $400 000 to acquire the mining site,$600 000 in geological survey costs and $300 000 in excavating an open pit mine.It has also acquired a fleet of trucks to transport the ore,at a total cost of $160 000; the trucks have an estimated life of 5 years and zero residual value.Epson has extracted 300 000 tonnes of ore in its first year of production and expects to mine the same amount each year for the life of the mine.The mine will have no value when the ore has been extracted.In its first year of production,Epson's total expense for amortisation and depreciation should be shown as:

• A) $292 000
• B) $130 000
• C) $146 000
• D) $162 000

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Definitions:

Operating Loss

A negative financial result that occurs when a company's operating expenses exceed its gross profits.

Financial Statement Components

The main parts of financial statements, including the balance sheet, income statement, statement of cash flows, and statement of changes in equity.

FASB

The Financial Accounting Standards Board, a private, non-profit organization that establishes financial accounting and reporting standards in the U.S.

Comprehensive Income

Comprehensive Income includes all changes in equity during a period except those resulting from investments by owners and distributions to owners.