GoodResources 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 "property, plant or equipment" under the full cost method?
A)$100,000
B)$200,000
C)$300,000
D)$700,000

Question

GoodResources 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 "property, plant or equipment" under the full cost method?
A)$100,000
B)$200,000
C)$300,000
D)$700,000

Quizplus · Accepted Answer

Under the full cost method, all costs incurred in exploration, evaluation, and development are capitalized as "property, plant, or equipment." In this case, the total costs incurred in exploration, evaluation, and development for the Alpha and Zeta mines are $300,000 + $100,000 + $200,000 = $600,000. Since the Beta mine was abandoned, its costs are not capitalized. Therefore, the amount that would be capitalized as "property, plant, or equipment" under the full cost method is $600,000.

GoodResources Incurred the Following Costs How Much Would Be Capitalized as "Property, Plant or Equipment