Company A acquired a mine in Ontario on January 1, 2020. Under Provincial Law they must restore the property to its original condition after use which is expected to be 10 years Company A in the past has done more than the minimum required by law and has built schools, parks and recreation centres They immediately announced plans to build a park on this location when they are done in 10 years They estimate the cost of meeting the minimum legal requirements is $ 1,000,000 in 10 years They estimate that building the park will add $ 1,000,000 Observable discount rate is 5% At December 31, 2021 the cost estimates have changed to $ 1,200, 000 for each. This change was due to the expected higher costs of materials at that time than originally estimated at Jan 1. 2020.
Company A acquired a mine in Ontario on January 1, 2020. Under Provincial Law they must restore the property to its original condition after use which is expected to be 10 years Company A in the past has done more than the minimum required by law and has built schools, parks and recreation centres They immediately announced plans to build a park on this location when they are done in 10 years They estimate the cost of meeting the minimum legal requirements is $ 1,000,000 in 10 years They estimate that building the park will add $ 1,000,000 Observable discount rate is 5% At December 31, 2021 the cost estimates have changed to $ 1,200, 000 for each. This change was due to the expected higher costs of materials at that time than originally estimated at Jan 1. 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Company A acquired a mine in Ontario on January 1, 2020.
Under Provincial Law they must restore the property to its original condition
after use which is expected to be 10 years
Company A in the past has done more than the minimum required by law and
has built schools, parks and recreation centres
They immediately announced plans to build a park on this location when they
are done in 10 years
They estimate the cost of meeting the minimum legal requirements is
$ 1,000,000 in 10 years
They estimate that building the park will add $ 1,000,000
Observable discount rate is 5%
At December 31, 2021 the cost estimates have changed to $ 1,200, 000 for
each.
This change was due to the expected higher costs of materials at that time
than originally estimated at Jan 1, 2020. TDCI 201
Transcribed Image Text:Required
Journal entries related to ARO for year ended December 31,2020 under
both ASPE and IFRS
Journal entries related to ARO for year ended December 31,2021 under
both ASPE and IFRS.
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