Company A obtained the rights to operate a coal mine and started its operations on January 1, 2025. A the coal is extracted in 4 years, Company A is obligated to restore the land to its original condition. The company's controller has provided the following three cash flow possibilities for the restoration costs: Cash Flow Probability $1,000,000 10% 1,400,000 60% 1,800,000 30% Compar A's credit-adjusted risk-free rate of interest is 6%, and its fiscal year ends on December 31. much accretion expense will Company A report in its 2026 income statement?
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- Montello Inc. purchases a delivery truck for $15,000. The truck has a salvage value of $3,000 and is expected to be driven for 120,000 miles. Montello uses the units-of-production depreciation method and in year one it expects to use the truck for 23,000 miles. Calculate the annual depreciation expense.schefter mining operates a copper mine in wyoming. Acquisitions, explorations, and development costs totaled $8.3 million. extraction activities began on July 1, 2024. After the copper is extracted approximately six years, schefter is obligated to restore the land to its original condition, including constructing a park. the company controller has 3 cash flow possibilities for restoration costs 1. $710000 at 25% probability 2. $810000 at 25% probability 3. $910,000 at 50% probability the companys credit -adjusted rate of interest is 6% and ends fiscal year dec 31st. required 1. what is the initial cost of the copper mine? 2. how much accreciation will schefter report in its 2024 income statement? 3. what is the book value of the asset retirement obligation that schefter will report in its 2024 balance sheet? 4. assume the actual restoration costs incurred in 2030 totaled $881,000. what amount of gain or loss will schefter recognize on retirement of the liability? cost of mine accretion…Peach Company purchased a machine for P7, 000, 000 on Jan.1, 2019 and received a government grant of P1,000,000 toward the capital cost. The machine is to be depreciated on a straight line basis over 5 years and estimated to have a residual value of P500,000 at the end of this period. Required: Prepare all journal entries for the year 2019 assuming the government grant is accounted for as: 1. Deferred income 2. Deduction from the cost of the asset
- Problem 4Illusion Company purchased a tract of resource land in 2019 for P3,960,000. The content of the tract was estimated at120,000 units. When the resource has been exhausted, it is estimated that the land will be worth P120,000.Building was set up at a cost of P960,000 and heavy equipment was purchased in early January 2019 for P1,240,000. Theuseful life of the building is 8 years and the useful life of the equipment is 4 years.In 2019, 12,000 units have been extracted. This was one half of the annual extraction which can be expected following thefirst year of operations. In 2020, 25,000 units were expected.Required:Prepare journal entries to record the transactions relating to the resource property for 2019 and 2020Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, anddevelopment costs totaled $7.3 million. Extraction activities began on July 1, 2024. After thecopper is extracted in approximately six years, Schefter is obligated to restore the land to itsoriginal condition, including constructing a park. The company’s controller has provided thefollowing three cash flow possibilities for the restoration costs:Cash Flow Probability1. $ 610,000 25%2. 710,000 25%3. 810,000 50%The company’s credit-adjusted, risk-free rate of interest is 6%, and its fiscal year ends onDecember 31.Note: Use appropriate factor(s) from the tables provided. Round other intermediatecalculations to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of $1,FVAD of $1 and PVAD of $1)Required:1. What is the initial cost of the copper mine?2. How much accretion expense will Schefter report in its 2024 income statement?3. What is the book value of the asset retirement obligation that Schefter…On January 1, 2018 Samar Company paid P5, 400, 000 for property containing natural resource of 2,000,000 tons of ore. The estimated discounted amount of restoring the land after the resource is exhausted isP450, 000 and the land will have a value of P650,000 after it is restored for suitable use. Tunnels, bunk houses and other fixed installation are constructed in the amount of P8, 000, 000. Such expenditures are to be charged to mine improvements. Operations began on January 1, 2019 and resource removed totaled 600,000 tons. During 2020, a discovery was made indicating that available resources after 2019 will total 1,875,000 tons. At the beginning of 2020, additional bunk houses were constructed in the amount of P770,000. In 2020, only 400,000 tons were mined because of a strike. REQUIRED: Prepare all indicated entries for 2018, 2018, and 2020.
- Jubilant Company acquired a tract of land containing an extractable natural resource. The entity is required by the purchase contract to restore the land to a condition suitable for recreational use after it had extracted the natural resource. Geological survey indicated that the recoverable reserves will be 2,500,000 tons and that the extraction will be completed in five years. Land Exploration and developmental cost Expected cash flow for restoration cost Credit adjusted risk free interest rate PV of 1 at 10% for 5 periods 9 000 000 1 000 000 1 500 000 10% 0.621. The Fairy Company purchased a site for limestone quarry for P 100,000 on January 2, 2020. It estimates that the quarry will yield 400,000 tons of limestone. It estimates that its retirement obligation has a fair value of P 20,000 after which the land can be sold for P 10,000. In 2020, 80,000 tons were quarried and 60,000 tons sold. Cost of production (excluding depletion) are P4 per ton. Required: a. Compute the depletion cost per ton. b. Compute the total cost of inventory at December 31, 2020. c. Compute the total cost of goods sold for 2020. 2. Cooler Company acquired a tract of land containing an extractable natural resource. Cooler is required by the purchase contract to restore the land to a condition suitable for recreational use after it has extracted the natural resource. Geological surveys estimate that the recoverable reserves will be 5,000,000 tons and that the land will have of P1,000,000 after restoration. Relevant cost information as follows: Land P 9,000,000…Natalie Company purchased a machine for P 6, 600, 000 on January 1, 2014 and received a government grant ofP600, 000 towards the capital cost. The policy is to treat the grant as a reduction in the cost of the asset. Themachine is to be depreciated on a straight line basis over 10 years with a residual value of P500, 000. On January 1,2016, the grant became fully repayable because of noncompliance with conditions. What is the depreciation for 2014?a. 610, 000 b. 600, 000 c. 660, 000 d. 550, 000 What is the depreciation for 2016?a. 610, 000 b. 600, 000 c. 780, 000 d. 730, 000
- 2.Suppose that you acquired a commercial building (a drilling gear box plant) and put in service in January 2018. The cost of the property is $2,000,000, which includes $500,000 value of land. Determine the amount of depreciation that is allowed during the first year of ownership, 2018, by the government. CCA rate for commercial building is 4%. Select one: a. $80,000 cross out b. $60,000 cross out c. $20,000 cross out d. $30,000 cross out Clear my choice ast saved at 1 2-24:24Rapids Company had assets as of December 31, 2022 of Original Accumulated Cost Depreciation/Amortization $50,000 $6,000 Asset Copyright Broadcasting license $50,000 $0 The company acquired the license in 2022. It is renewable every five years indefinitely Management is concerned about the value of the assets and decides to test for impairment. Management estimates the following information for each asset Asset Copyright Broadcasting license Undiscounted Future Cash Flows $57,000 $61,000 Fair Value $26,000 $25,000 What is the total amount of impairment loss for 2022? ENTER YOUR ANSWER AS A POSITIVE NUMBER.A company purchased an asset for $3,700.000 that will be used in a 3-year project. The asset is in the 3-year MACRS class. The depreciation percentage each year is 33.33 percent. 44.45 percent, and 14.81 percent, respectively What is the book value of the equipment at the end of the project? Multiple Choice $3.425.830 $274,170 $2.466,790