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Situation 2: The \$20 Million Question The Hard Kock Mining Company has just completed the first year of operations at its new strip thite, "\$hy operations. The Mine is expected to operate for 20 years. Hard Rock is subject to eriniron Based on its experience and industry data, as well as current technology, Hard Rock forecasts that restoration will cost about $10 million when it is undertaken. Of those costs, about $4 million is for restoring the topsoli thin was removed in preparing the site for mining operations (prior to opening the mine). The rest is directly tional to the depth of the mine, which in tum is directly proportional to the amount of ore extracted. How would you answer the following questions? 1. Should Hard Rock recognize a liability for site restoration in conjunction with the opening of thy some Doe Mine? If so, what is the amount of that liability? 2. After Hard Rock has operated the Lonesome Doe Mine for 5 years, new technology is intrody reduces Hard Rock's estimated future restoration costs to $7 million, $3 million of which relates to the topsoil. How should Hard Rock account for this change in its estimated future liability