4. Big Dog Digging Ltd. (BDD) is a private mining company located in New Brunswick. On January 1, 2021, BDD purchased the rights to mine on a piece of land owned by the New Brunswick government. The rights cost $10,000,000 in cash and allow BDD to extract any minerals found on the land for five years (i.e., until December 31, 2026). BDD's accountant has determined that this should be recorded in an asset account called "Land Rights". As part of the contract, BDD must restore the land to a usable condition at the end of the five-year period. BDD estimates that this will cost $1,500,000. Previous asset retirement obligations for the company have been calculated using a 6% discount rate. BDD has a December 31 year-end. BDD uses straight-line depreciation to record the amortization of its assets. (6 marks)

Required:

Prepare the journal entries required for 2021, assuming that no entries have yet been recorded in the accounting system.