Canadian Iron Mines Ltd (CIM)obtained the rights to a new mine in northern Labrador on January 1, 2020, for $18,000,000 in cash. CIM depreciates similar assets using straight-line depreciation with no residual value. As part of this purchase, the province requires CIM to return the land to its natural state at the end of the mining activity. CIM estimates that it will operating the mine for 20 years, at which time it will cost $3,500,000 to restore the site to its original state. CIM uses a 6% discount rate for such projects and has a December 31 year end.

a) Record the journal entry for the purchase of the rights to the new mine (use the asset account Rights to NL Mine).

b) Calculate and record the journal entry for the asset retirement obligation associated with the project.

c) Prepare the journal entries for the years ended December 31, 2020 and December 31, 2021.