schefter mining operates a copper mine in wyoming. Acquisitions, explorations, and development costs totaled $8.3 million. extraction activities began on July 1, 2024. After the copper is extracted approximately six years, schefter is obligated to restore the land to its original condition, including constructing a park. the company controller has 3 cash flow possibilities for restoration costs 1. $710000 at 25% probability 2. $810000 at 25% probability 3. $910,000 at 50% probability the companys credit -adjusted rate of interest is 6% and ends fiscal year dec 31st. required 1. what is the initial cost of the copper mine? 2. how much accreciation will schefter report in its 2024 income statement? 3. what is the book value of the asset retirement obligation that schefter will report in its 2024 balance sheet? 4. assume the actual restoration costs incurred in 2030 totaled $881,000. what amount of gain or loss will schefter recognize on retirement of the liability? cost of mine accretion expense book value gain or loss
schefter mining operates a copper mine in wyoming. Acquisitions, explorations, and development costs totaled $8.3 million. extraction activities began on July 1, 2024. After the copper is extracted approximately six years, schefter is obligated to restore the land to its original condition, including constructing a park. the company controller has 3 cash flow possibilities for restoration costs
1. $710000 at 25% probability
2. $810000 at 25% probability
3. $910,000 at 50% probability
the companys credit -adjusted rate of interest is 6% and ends fiscal year dec 31st.
required
1. what is the initial cost of the copper mine?
2. how much accreciation will schefter report in its 2024 income statement?
3. what is the book value of the asset retirement obligation that schefter will report in its 2024 balance sheet?
4. assume the actual restoration costs incurred in 2030 totaled $881,000. what amount of gain or loss will schefter recognize on retirement of the liability?
cost of mine
accretion expense
book value
gain or loss
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