Falcon Mining Company operates a copper mine in Arizona. The company paid $2,000,000 in year 1 for the mining site and spent an additional $500,000 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 a greenbelt. The company has provided the following three cash flow possibilities for the restoration costs:

	Cash Outflow	Probability
1	$200,000	20%
2	$500,000	45%
3	$800,000	35%

To aid extraction, Falcon purchased some new equipment in July 1, year 1, for $150,000. After the copper is removed from the mine, the equipment will be sold. The credit-adjusted, risk-free rate of interest is 10%.

Required:

1. Determine the cost of the copper mine.

2. Prepare the journal entries to record the acquisition costs of the mine and the purchase of equipment.