1. What is the initial cost of the coal mine? (Round computations to nearest wholedollar.)2. How much accretion expense will Calegari report in its 2011 and 2012 incomestatements?3. What is the carrying value (book value) of the asset retirement obligation that Calegariwill report in its 2011 and 2012 balance sheets?4. Assume that actual restoration costs incurred in 2016 totaled $1,370,000. What amountof gain or loss will Calegari recognize on retirement of the liability?

HW 5 Problem 1 Calegari Mining paid $2 million to obtain the rights to operate a coal mine in Tennessee. Costs of exploring for the coal deposit totaled $1,500,000 and development costs of $5 million were incurred in preparing the mine for extraction, which began on January 2, 2011. After the coal is extracted in approximately five years, Calegari 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: The company's credit-adjusted, risk-free rate of interest is 7%, and its fiscal year ends on December 31. Required: 1. What is the initial cost of the coal mine? (Round computations to nearest whole dollar.) 2. How much accretion expense will Calegari report in its 2011 and 2012 income statements? 3. What is the carrying value (book value) of the asset retirement obligation that Calegari will report in its 2011 and 2012 balance sheets? 4. Assume that actual restoration costs incurred in 2016 totaled $1,370,000. What amount of gain or loss will Calegari recognize on retirement of the liability? Problem 2 During the current year, Peterson Data Corporation purchased all of the outstanding common stock of Junior Jackson Inc. (JJI), paying $36 million in cash. Peterson recorded the assets acquired as follows: The book value of JJI's assets and owners' equity before the acquisition were $22 million and $18 million, respectively. Required: Compute the fair value of JJI's liabilities that Peterson assumed in the acquisition. Problem 3 Financial statements provide limited information for external users to ascertain the necessary information upon which to base decisions. What are other sources in which companies can disclose financial information to external users? ****************