Montana mining co and Alou

1 2 Alou Corporation reported the following information at year-end: Estimated Book Value Cash Flows Fair Value Building $590,000 $385,000 $400,000 Patent 3 40,000 $ 45,000 $ 42,000 Copyright 5: 45,000 $ 43,000 $ 44,000 Machine $105,000 $125,000 $ 88.000 Based on the above information, what is the total amount of impairment loss that Alou should record at year-end? Multiple Choice 0 $132,000. $131,000. 0 0 $134,000. 0 $191000. Montana Mining Co. (MMC) paid $200 million for the right to explore and extract rare metals from land owned by the state of Montana. To obtain the rights. MMC agreed to restore the land to a suitable condition for other uses after its exploration and extraction activities. MMC incurred exploration and development costs of $60 million on the project. MMC has a credit-adjusted risk free interest rate is 8%. It estimates the possible cash flows for restoring the land, three years after its extraction activities begin, as follows: (PV of $1, PVA of1 ) (Use appropriate factor(s) from the tables provided.) Cash Outflow Probability $13million 30% $39million 70% The asset retirement obligation (rounded) that should be recognized by MMC atthe beginning ofthe extraction activities is: Multiple Choice 0 $18.3 million. $24.8 million. $40 million. 0 0 $28 million. 0