AS fx extraction of the gold. After the gold is extracted in approximately three years, the c Problem #3 Natural Resource & Depletion (25 points)- Parts A, B, & C Landow Mining Company operates a gold mine in Westem Colorado. The company paid $830,000 in 2021 for the mining site and spent an additional $750,000 to prepare the mine for 5 extraction of the gold. After the gold is extracted in approximately three years, the company is required to restore the land to its original condition, including repaving of roads and replacing a greenbelt. The company has provided the following two cash flow possibilities for the restoration costs: 9 Cash Outflow) 360,000 435,000 Probability 45% 55% 13 Landow's credit-adjusted risk-free interest rate is 6%. The PV of S1 factor at 6% for 3 years is 0.83962. 14 The PV of Annuity at 6% for 3 years is 2.67301. 16 To aid extraction, Landow purchased some new equipment on July 1, 2021, for $250,000. After 17 the gold is removed from this mine, the equipment will be sold for an estimated residual amount 18 of $24,000. There will be no residual value for the silver mine. The eqiupment uses straight-line depreciation 20 The company expects to extract 8.5 million pounds of gold from the mine. Actual extraction of gold was 21 was 2.5 million pounds in 2021 and 1.4 million pounds in 2022. Landow sold 1.3 million pounds 22 in 2021. Units of production (activity) method is used to calculation depletion. 23 24 A. Provide the journal entry to record the initial cost of the gold mine and equipment. 25 26 27 28 29 30 32 33 35 36 37 38 B. Determine the depeletion rate (assuming units of production) for the gold mine. Problem 1 Problem 2 Problem 3 + Ready Type here to search O