D7 Mining Corp. operates a number of base metal mines in the area surrounding Timmons, Ontario. The company decided on 1 April 2016 to dispose of one of its mining properties. The property contains mineral rights (an intangible asset) and on-site mining equipment. The mineral rights have a carrying value of $1,140,000 while the mining equipment has a net book value (after depreciation) of $470,000. Due to the currently depressed value of base metals on the world market, the value of the mineral rights is estimated to be $835,000. The recoverable amount of the mining equipment is very low, no more than $114,000, because most of the equipment is fixed to the property and cannot be moved at any reasonable cost. The board of directors for D7 Mining is already actively searching for a buyer of the mine and they are confident that a buyer will be found within the year. As a public company traded on the TSX, D7 Mining must provide quarterly statements to the shareholders.

Required:

1. Prepare journal entries to recognize the mineral rights and equipment as a disposal group, including any reclassification entries, if necessary.

2. Assume that at 30 June (the end of the second quarter), the value of base metals has increased and the mineral rights are worth $1,220,000. Prepare any necessary journal entries to reflect the increase in value.

3. On 28 July (in the third quarter), D7 Mining signs a contract which conveys all of the rights to the mine and the equipment to GSB Inc., a Chilean-based mining company. The contract price is $1,450,000. Prepare the journal entry (or entries) to record the sale.