During 2023, Jaidev's Copper Mine Inc. (JCMI) built the infrastructure for an open pit copper mine...

 

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During 2023, Jaidev's Copper Mine Inc. (JCMI) built the infrastructure for an open pit copper mine in a remote area in Northern British Columbia at a total cost of $20 million paid in cash. The mine is expected to produce 800,000 tonnes of copper over its estimated useful life of 8 years. The BC government's approval granted to JCMI was conditional upon the company remediating the site and establishing a wildlife reserve. The estimated cost of remediation is $4.5 million. An appropriate interest rate for this obligation is 4%. Assume that JCMI has grouped the $20 million construction costs and the remediation asset in an account called "Mine assets," and it uses the units-of-production method to depreciate this asset. JCMI began mining operations in January 2024 and during the year, it mined 60,000 tonnes of copper. In 2025, it increased its production to 89,000 tonnes of copper. Its year-end date is December 31. Assume that JCMI elects to report its financial results in accordance with Accounting Standards for Private Enterprise (ASPE). Requirement a. Prepare a journal entry to record the asset retirement obligation and a summary journal entry to record the cost of construction. Date both entries December 31, 2023. (Round your answers to the nearest whole dollar. Record debits first, then credits. Explanations are not required.) Prepare the journal entry to record the present value of the asset retirement obligation, recorded as part of the cost of the mine. Date December 31, 2023 Account Prepare a summary journal entry to record the cost of construction of the copper mine. Date December 31, 2023 Account Debit Credit Debit Credit Requirement b. Prepare the adjusting entries pertaining to the mine asset and asset retirement obligation for the year ended December 31, 2024. (Round your answers to the nearest whole dollar. Record debits first, then credits. Explanations are not required.) Begin by recording the increase in the provision for the future site restoration cost due to the passage of time for the year ended December 31, 2024. Date December 31, 2024 Account Debit Credit During 2023, Jaidev's Copper Mine Inc. (JCMI) built the infrastructure for an open pit copper mine in a remote area in Northern British Columbia at a total cost of $20 million paid in cash. The mine is expected to produce 800,000 tonnes of copper over its estimated useful life of 8 years. The BC government's approval granted to JCMI was conditional upon the company remediating the site and establishing a wildlife reserve. The estimated cost of remediation is $4.5 million. An appropriate interest rate for this obligation is 4%. Assume that JCMI has grouped the $20 million construction costs and the remediation asset in an account called "Mine assets," and it uses the units-of-production method to depreciate this asset. JCMI began mining operations in January 2024 and during the year, it mined 60,000 tonnes of copper. In 2025, it increased its production to 89,000 tonnes of copper. Its year-end date is December 31. Assume that JCMI elects to report its financial results in accordance with Accounting Standards for Private Enterprise (ASPE). Requirement a. Prepare a journal entry to record the asset retirement obligation and a summary journal entry to record the cost of construction. Date both entries December 31, 2023. (Round your answers to the nearest whole dollar. Record debits first, then credits. Explanations are not required.) Prepare the journal entry to record the present value of the asset retirement obligation, recorded as part of the cost of the mine. Date December 31, 2023 Account Prepare a summary journal entry to record the cost of construction of the copper mine. Date December 31, 2023 Account Debit Credit Debit Credit Requirement b. Prepare the adjusting entries pertaining to the mine asset and asset retirement obligation for the year ended December 31, 2024. (Round your answers to the nearest whole dollar. Record debits first, then credits. Explanations are not required.) Begin by recording the increase in the provision for the future site restoration cost due to the passage of time for the year ended December 31, 2024. Date December 31, 2024 Account Debit Credit