Silver Linings Ltd. commenced a mining operation in early 20X5. The company is required by the terms of provincial legislation to remediate the mine site when mining is completed, likely in five years time. Silver Linings Ltd. estimates that this will cost $3,000,000. A reasonable market interest rate is 9%. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.)

Required: 1. Calculate the present value of the decommissioning obligation. (Round time value factor to 5 decimal places and final answer to the nearest dollar amount.)

2. Prepare a table that shows the balance of the provision and interest expense over the life of the liability. (Round time value factor to 5 decimal places and final answer to the nearest dollar amount.)

-a. Assume that at the end of 20X6, the company re-estimates that the cost of remediation at $3,700,000. Other assumptions are unchanged. Calculate the interest expense for 20X6, the new present value, and the adjustment to the obligation for the change in estimates. (Round time value factor to 5 decimal places and final answer to the nearest dollar amount.)

Interest expense
New present value
Adjustment to asset and obligation	b. Prepare a table that shows the balance of the revised provision and interest expense over the life of the liability. (Round time value factor to 5 decimal places and final answer to the nearest dollar amount.)

	Opening Net Liability	Interest Expense @ Market Rate	Closing Net Liability
Year 1
Year 2
Year 3