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On 1 January 2023 , Entity A acquired an iron ore mine at a cost of $880,000 by a cheque. The iron ore mine is

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On 1 January 2023 , Entity A acquired an iron ore mine at a cost of $880,000 by a cheque. The iron ore mine is recognised as a PPE. In addition, when all the ore has been extracted (estimated ten years' time) the company will face estimated costs for clean-up of the area affected by the mining which has a present value of $310,000. These costs would still have to be incurred even if no further ore was extracted. The discount rate is 5.00%. REQUIRED: How should the above case be initially recognised in the financial statements? ACCOUNTS FOR INPUT: | Clean-up expense | Clean-up income | Provision for clean-up expense | | Provision for clean-up income | Bank | PPE | Contingent liability | Contingent asset |

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