Accounting for the Extractive Industries

North Australia Mining Ltd$.$ commenced gold mining operations in Northern Queensland on $1$ July $2019.$ During the first year of exploration, North Australia Mining Ltd$.$ incurred the following costs $($in millions of dollars$)$ in relation to two Areas of Interest; these costs include a mining right lease for $15$ years:

Dawson Creek Orange Range Total Costs

$$17$ million $29$ million $45$ million

Early in $2021$ gold was discovered at site Orange Range. At this time, exploration at the Dawson Creek site was not considered economically viable and was abandoned. In relation to exploratory expenditure, $35\%$ relates to intangibles and the remainder to property, plant and equipment. On $30$ June $2021,$ the company incurred development costs of $$25$ million in relation to fixed infrastructure and property, plant and equipment for the Orange Range site.

On $1$ July $2021,$ production commenced at the Orange Range site. It is estimated that the site contains $2,900,000$ ounces of gold. The current sale price is $$1,700$ per ounce. Production to the $30$ June $2022$ extracted $240,000$ ounces of gold incurring an incremental production cost of $$900$ per ounce. At the end of the financial year, $185,000$ ounces of gold had been sold. Costs will be written off on a production basis.

North Australia Mining Ltd$.$s financial year ends on $30$ June.

Required:

Prepare journal entries using the Area of Interest method for FY$2020,2021$ and $2022.$

Calculations should be rounded to the nearest dollar. $(12$ marks$)$