Soorya Resources incurred the following costs: $$\begin{array} { | l | c | c | c | }
\hline \text { Mine Site } & \begin{array} { c }
\text { Costsincurred in } \
\text { exploration and } \
\text { evaluation }
\end{array} & \begin{array} { c }
\text { Costs incurred in } \
\text { development }
\end{array} & \text { Status at year-end } \
\hline \text { Alpha } & 300,000 & 100,000 & \begin{array} { c }
\text { Producing } @ 5 \% \text { of } \
\text { reserves }
\end{array} \
\hline \text { Beta } & 200,000 & & \text { Abandoned } \
\hline \text { Zeta } & 100,000 & 200,000 & \text { In development } \
\hline
\end{array}$$ How much would be capitalized as "intangible assets" under the full cost method?
A)$300,000
B)$400,000
C)$500,000
D)$600,000

Question

Soorya Resources incurred the following costs: $$\begin{array} { | l | c | c | c | } 
\hline \text { Mine Site } & \begin{array} { c } 
\text { Costsincurred in } \
\text { exploration and } \
\text { evaluation }
\end{array} & \begin{array} { c } 
\text { Costs incurred in } \
\text { development }
\end{array} & \text { Status at year-end } \
\hline \text { Alpha } & 300,000 & 100,000 & \begin{array} { c } 
\text { Producing } @ 5 \% \text { of } \
\text { reserves }
\end{array} \
\hline \text { Beta } & 200,000 & & \text { Abandoned } \
\hline \text { Zeta } & 100,000 & 200,000 & \text { In development } \
\hline
\end{array}$$ How much would be capitalized as "intangible assets" under the full cost method?
A)$300,000
B)$400,000
C)$500,000
D)$600,000

Quizplus · Accepted Answer

Under the full cost method, all costs incurred in the exploration, development, and acquisition of reserves are capitalized regardless of the outcome. This includes the costs for mines that are producing, in development, or abandoned. Therefore, the total capitalized cost is $300,000 (Alpha exploration and evaluation) + $100,000 (Alpha development) + $200,000 (Beta exploration and evaluation) + $100,000 (Zeta exploration and evaluation) + $200,000 (Zeta development) = $900,000. However, since $900,000 is not an option and the question seems to be asking for the total costs that would typically be classified under "intangible assets," which generally include exploration and evaluation costs, the correct answer would be based on the options provided, which seems to be a misunderstanding in the explanation process. Given the options, the correct approach to calculate intangible assets specifically would focus on exploration and evaluation costs only, which are $300,000 (Alpha) + $200,000 (Beta) + $100,000 (Zeta) = $600,000. This correction aligns with recognizing the mistake in the initial explanation process.

Soorya Resources Incurred the Following Costs How Much Would Be Capitalized as "Intangible Assets" Under the |