On January 02, 2021, ACME Incorporated constructed a sea-salt extraction platform and processing plant on the Caribbean Sea for $500,000 cash. The contract runs for 10 years at which time ACME must dismantle the site. The decommissioning and removal costs are estimated at $350,000. The company has a December 31 year end and none of the restoration obligation applies to production. An appropriate discount rate for this transaction is 7%.

Required:

Show your work below each entry and round interim calculations to four decimal places and final answers to the nearest dollar.

Assuming that ACME follows IFRS,

1. Prepare all entries related to the site restoration only for 2021 (ignore depletion entries).
2. On January 3, 2023, the present value of the restoration obligation is $33,814 (present value of the increase). Prepare the required entry assuming that the increase relates to production.