Bailey's Gold Mines Inc. (BGMI) purchases a piece of land for the purpose of developing a...
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Bailey's Gold Mines Inc. (BGMI) purchases a piece of land for the purpose of developing a gold mine. BGMI is legally required to remove all structures and convert the mine site to a wildlife sanctuary at the end of its estimated 10-year useful life. BGMI estimates that it will have to spend $11,000,000 to decommission the site and reclaim the land when operations cease. Assume a discount rate of 5%. BGMI uses straight-line depreciation. Required: Prepare the journal entries to recognize this site restoration cost the company would record upon initial acquisition and subsequently. Bailey's Gold Mines Inc. (BGMI) purchases a piece of land for the purpose of developing a gold mine. BGMI is legally required to remove all structures and convert the mine site to a wildlife sanctuary at the end of its estimated 10-year useful life. BGMI estimates that it will have to spend $11,000,000 to decommission the site and reclaim the land when operations cease. Assume a discount rate of 5%. BGMI uses straight-line depreciation. Required: Prepare the journal entries to recognize this site restoration cost the company would record upon initial acquisition and subsequently.
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On Initial recognition Present value of 11000000 for 10 years at the rate of 5 is recognised as deco... View the full answer
Related Book For
Engineering Economy
ISBN: 978-0132554909
15th edition
Authors: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Posted Date:
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