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A Company acquired a tract of land containing an extractable natural resource. The entity is required by the contract to restore the land to a
A Company acquired a tract of land containing an extractable natural resource. The entity is required by the 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 1,000,000 tons and that the extraction will be completed in 10 years.
Acquisition cost
Exploration and development costs
Expected cash flow for restoration cost Credit-adjusted risk free interest rate
Using a PV of 4 decimal points, determine:
(1)Total depletable cost, beginning of year (2)Depletion expense for the current year (3)Carrying amount of wasting asset, end of year
9,000,000 1,000,000 1,500,000 12%
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