Question
Wyoming industries acquired a mining facility at a cost of $14,000,000 at the beginning of 2024. The facility has a useful life of 19 years,
Wyoming industries acquired a mining facility at a cost of $14,000,000 at the beginning of 2024. The facility has a useful life of 19 years, is expected to have no residual value, and will be depreciated on a straight-line basis. Under environmental regulations, Wyoming is required to dismantle and remove the facility at the end of the useful life and bear any cleanup costs, which are inevitable in such operations. The cost to comply with the law is estimated to be $2,850,000. The appropriate discount rate is 8.4%.
What is the Acc. Depreciation on the mining facility as of December 31, 2024.
What will be the amount reported for accretion expense be on the 2025 income statement?
If the mining facility is disposed of at the end of the expected life and $1,320,000 is the costs of clean-up, what will be reported as gain/loss on Settlement of Asset retirement obligation?
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