Kent Mining Company [CMC] prospects for new minerals on Krypton and other nearby planets. It sets up operations on a neighboring planet Zippon after discovering vast deposits of a very rare mineral which is used in producing solid state fuel for space transportation. The Zippon government has been very strict on ecological preservation on its planet and has been most careful not to follow in the path of Planet Earth. CMC is required by the planetary existing laws to reclaim the site once the mining operations are completed. The company expects to close the mine after a 20-year operation, at the end of 2035 and estimates that such reclamation and restoration measures will cost $5,000,000. CMC uses a 6% annual discount rate and accrues interest semi-annually.

The cost of setting up the mine, classified as Plant and Equipment - Mining, amounted to $16,000,000. CMC attributes these costs to be the result of acquiring the mine and expects that no additional reclamation and restoration costs will be incurred in the future. It uses a fiscal year ending December 31.

The journal entry required to record the future reclamation and restoration costs when the mine began its operations would include ($ Amount; Debit/Credit - Account):

a.

$1,532,800; Credit - ARO Liability

b.

$16,000,000; Credit - ARO Liability

c.

$5,000,000; Credit - ARO Liability

d.

$17,532,800; Debit - Loss on Land Restoration

e.

$1,559,000; Credit - ARO Liability