Exercise 11-17 Cost of a natural resource; depletion and depreciation Chapters 10 and 11 L011-2, 11-31 Jackpot Mining Company operates a copper mine in central Montana. The company paid $1950,000 in 2018 for the mining site and spent an additional $790,000 to prepare the mine for extraction of the copper. After the copper is extracted in approximately four years, the company is required to restore the land to its original condition, including repaving of roads and replacing company has provided the following three cash flow possibilities for the restoration costs (FV of SL PV of SLEVA O greenbel. The FVAD of $1 and PVAD of $ (Use appropriate factors) from the tables provided. P VA of $1 Probability Outflow 090,000 590,000 790,000 To aid extraction, Jackpot purchased some new equipment on July 1, 2018, for $150,000. After the copper is removed from this mine, the equipment will be sold for an estimated residual amount of $31.000. There will be no residual value for the copper mine. The credit-adjusted risk-free rate of interest is 11% The company expects to extract 11.9 million pounds of copper from the mine. Actual production was 3.5 million pounds in 2018 and 49 million pounds in 2019. Required: 1. Compute depletion and depreciation on the mine and mining equipment for 2018 and 2019. The units-of-production method is used to calculate depreciation. (The expected format for rounding is presented in the appropriate rows of the table. Round your final answers to nearest whole dollar.) Restoration costs: Cash outflow Probability Probable Restoration Cost 122,500 236.000 Possibility 1 $ 490,000 590,000 40% 14 Exercise 11-29 Impairment property, plant, and equipment LLM- General Optic Corporation operates a manufacturing plant in Arizona Due to a significant decine in demand for the product manufactured at the Artzona site, an impairment test is deemed appropriate Management has acquired the following Information for the assets at the plant Spel Melated depreciation General's state of the total cash flow to be generated by alling the products manufactured at its l a plant, not discounted to present value The fair value of the Arizona plant is estimated to be $19,500,000 Required: 1. & 2. Determine the amount of impairment loss. If a loss is indicated, where would it appear in General Optic's multiple-step income statement? 3. If a loss is indicated, prepare the entry to record the loss 4. & 5. Determine the amount of impairment loss assuming that the estimated undiscounted sum of future cash flows is $19,500,000 Instead of $18,400,000 and $34.250,000 instead of $18.400,000 Deferences Complete this question by entering your answers in the tabs below. Reg 1 and 2 Determine the amount of impairment loss. If a loss is indicated, where would it appear in General Optie's multiple-step income statement? (Enter your answer in whole dollars) Impairment loss Location on income talent Operating expenses
