Bailey's Gold Mines Inc. (BGMI) paid $12 million on January 1, 2021 to purchase a piece of land for developing a gold mine. BGMI is legally required to remove all structures and convert the mine site to a wildlife sanctuary at the end of its estimated 10-year useful life. BGMI estimates that it will have to spend $11,000,000 to decommission the site and reclaim the land when operations cease. The present value of this $11,000,000 site restoration cost, assuming a discount rate of 5%, is $6,753,046. BGMI uses straight-line depreciation and has a December 31 year-end, and follows IFRS.

Required:

a) Prepare the journal entries to recognize the site restoration cost the company would record upon initial acquisition on January 1, 2021

b) Prepare any necessary year-end adjusting entries related to the asset and site restoration.