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I am having trouble with answering part 5 in this question. The last two numbers I am getting incorrect even though I'm following according to
I am having trouble with answering part 5 in this question. The last two numbers I am getting incorrect even though I'm following according to what is written in the textbook.
On May 1, 2024, Hecala Mining entered into an agreement with the state of New Mexico to obtain the rights to operate a mineral mine in New Mexico for $9.1 million. Additional costs and purchases included the following. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1,PVA of $1, FVAD of $1 and PVAD of $1 ) After the minerals are removed from the mine, the equipment will be sold for an estimated residual value of $11,000. The structures will be torn down. Geologists estimate that 710,000 tons of ore can be extracted from the mine. After the ore is removed, the land will revert back to the state of New Mexico. The contract with the state requires Hecala to restore the land to its original condition after mining operations are completed in approximately four years. Management has provided the following possible outflows for the restoration costs: Hecala's credit-adjusted risk-free interest rate is 9%. During 2024, Hecala extracted 111,000 tons of ore from the mine. The company's fiscal year ends on December 31 . Required: 1. Determine the amount at which Hecala will record the mine. 2. Calculate the depletion of the mine and the depreciation of the mining facilities and equipment for 2024, assuming that Hecala uses the units-of-production method for both depreciation and depletion. 3. How much accretion expense will the company record in its income statement for the 2024 fiscal year? 4. Are depletion of the mine and depreciation of the mining facilities and equipment reported as separate expenses in the income statement? 5. During 2025, Hecala changed its estimate of the total amount of ore originally in the mine from 710,000 to 910,000 tons. Calculate the depletion of the mine and depreciation of the mining facilities and equipment for 2025, assuming Hecala extracted 141,000 tons of ore in 2025. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. During 2025, Hecala changed its estimate of the total amount of ore originally in the mine from 710,000 to 910,000 tons. Calculate the depletion of the mine and depreciation of the mining facilities and equipment for 2025, assuming Hecala extracted 141,000 tons of ore in 2025. Note: Do not round your intermediate calculations. Round "Depreciation" and "Depletion" rates to 4 decimal places. Enter your answers in whole dollars rounded to the nearest whole numberStep by Step Solution
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