Bob the Builder acquires a right to operate a gold mine for 5 years in Northern Ontario on July 1, Year 6 by paying $400,000 cash and issuing a 640,000, four-year, noninterest-bearing note. According to the terms of the note, Bob has to pay four 160,000 installments at the anniversary of the note, starting June 30, Year 7. At the end of the 5 th year, Bob is legally required to restore the site and Bob expects to pay $100,000. Since Bob built Bob the Builder-themed playground at the gas station site, the town in Northern Ontario is very excited to have a similar playground in their town. Although not required, Bob knows people expect to have the playground. To Bobs best estimate, Bob expects to spend $25,000, once the site is restored (To make our lives easier, lets assume that $25,000 will be spent at the end of the 5 th year). Out of $100,000 above, the 50 percent is attributable to the acquisition and the rest is attributable to the production of mine. Bob uses straight-line depreciation method and mid-month convention is in place for the partial-year depreciation. Bobs fiscal year ends on December 31. Please assume that Bob uses 5% effective interest rate for the above transaction and Bob follows IFRS in the preparation of the financial statements.

(1) Prepare two journal entries on July 1, Year 6, one for the acquisition of the right to use gold mind (use gold mine for your journal entry) and another for asset retirement obligation.

(2) Assuming that Bob does not have any other PP&E other than those from the above transaction, what would be the depreciation expense for Year 6?

(3) Assuming that Bob does not have any other liabilities other than the those from the above transaction, what would be the total interest expense for Year 6?