1. On May, 1, 2020 Star Mines Inc. purchased an ore mine for $2,400,000 to access an estimated 1,244,000 tons of ore. The company incurred development costs of $180,000 related to the mine and purchased equipment for the mine for $ 360,000 with a useful life of 8 years. The equipment has no use outside of this mine project. The company is expected to restore the land for alternative uses after mining is complete. The presented value of the restoration cost is estimated to be $80,000. The company extracted 144,000 tons of ore in 2020 and sold 120,000 tons. Round the depletion rate to two decimals used in your calculations.

The ore mine should be recorded a:

• None of the other answers are correct
• $2,660,000
• $2,400,000
• 2,580,000

2. BPP Company maintains underground storage tanks for its operations. A new storage tank was installed and made ready for use at a cost of $600,000 on January 1, 2020. The useful life is estimated at 10 years, at which time the company is legally required to remove the tank and restore the area at an estimated cost of $50,000. The appropriate discount rate for the company is 12%. The present value factor of $1 at i=10% and n = 10 is 0.38554. The storage tank asset should be recorded at

• $580,723
• $619,277
• $600,000
• $650,000