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On 2 January 208, Keen Mining Lid commenced a mining operation Keen is required by the terms of provincial legislation to temediate the mine site
On 2 January 208, Keen Mining Lid commenced a mining operation Keen is required by the terms of provincial legislation to temediate the mine site when mining is completed, likely in 10 years' time. This means that a provision for decommissioning must be recorded Keen estimates that decommissioning will cos $560,000 in 10 years. A reasonable market interest rate is 6% (PV of $1. PVA of S1. and PVAD of \$1) (Use appropriate factor (s) from the tables provided.) Required: 1 Calculate the present value of the decommissioning obligation on January 2.208 (Round time value factor to 5 decimal places and final answer to the nearest Anllar amount.) 2 Prepare a table that shows the balance of the obligation for thee years (only) (Round your final answers to the nearest dollar amount.) 3 Assume that in 2010, Keen estimates that the cost of temediation will be $651,000, and that interest rates are now in the range of 8\%. Calculate the interest expense for 2010, the new piesent value, and the adjustment to the obligation for the change in estimates (Round time volue factor to 5 decimal places and final answers to the nearest dollat amount.)
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