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5. Extracto Ltd commences rasions on 1 January 2013. During 2013 Extracto Ltd explores three areas and 1 following costs: Good Bad Exploration and evaluation expenditure (Sm) 23 16

Solution

Journal Entry ( $ in Million) Account Tittle Debit Credit Tangible Asset Not Provided Intangible Asset Not Provided Bad Site $16.00 Tangible assets ($23X80%) $18.40 Intangible assets ($23X20%) $4.60 Good Site $23.00 Development Cost $27.00 Intangible Asset $7.00 Plant & Eqipment $20.00 Sales (1.9X $30) $57.00 Cost of Prodcution $4.00 Profit & Loss $53.00