On November 12, 2021, Hobart Industries purchased a 160-acre farmstead for $1,000,000. At the time of the purchase the appraised values of the components of the purchase were: Land $500,000 House 120,000 Machine shed 75,000 Other buildings 155,000 The company was willing pay the $150,000 premium because it believed that 200,000 pounds of dilithium was located beneath the farmland. At the time of purchase, the company intended 1 to use the house and machine shed in its operations until sufficient cash flow from operations was available to build a new mining complex -- this is projected to occur by June 30, 2025. In December 2021, the other buildings were demolished at a cost of $35,000. In January and February, 2022, the mineral survey was completed and tests indicated that 220,000 pounds of dilithium existed on the property. In March 2022, the company began digging a mine shaft to extract the ore. In April 2022 the state legislature passed a law requiring mining companies to restore mine sites before reselling the land. The company estimated that the present value (discount rate = 5%) of the restoration costs for the mine site was between $600,000 and $750,000 and the land could be sold for $200,000 when mine operations ceased. Mining Operations began on July 1, 2022. In the first six months of operation the company extracted 1,000 pounds of dilithium from the 10,000 tons of ore mined at a cost of $400,000. On December 31, 2022, 440 pounds of dilithium was in inventory. Construction of a new mine complex began on December 15, 2022 and is expected to be completed by June 30, 2023 -- two years ahead of schedule. The early construction of the facilities was due to increased cash flow because the company's dilithium was the purest on the market. Required: (40 points) A) Determine the amount of expense to be reported in Hobart's income statement for the year ended December 31, 2022. B) Explain your reasoning for the accounting judgments which you made in determining expenses for calendar year 2022 (part A above).