? ? ? ? Ivanhoe Industries Limited purchased a strip mine for cash on April 1, 2020

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Ivanhoe Industries Limited purchased a strip mine for cash on April 1, 2020 at a cost of $5,787,000. Ivanhoe expects to operate the mine for 10 years, at which it is legally required to restore the surrounding area to its original state. It is estimated that it will cost $477,000 to do this at the end of the mine's useful life. The company's year-end is December 31, and Ivanhoe follows ASPE. Prepare the journal entry to record the purchase of the mine and to record the asset retirement obligation for the mine on April 1, 2020. Based on the effective interest rate of 5%, the present value of the asset retirement obligation (i.e., its fair value) on the date of acquisition is $292,837. (Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Apr. 1, 2020 Account Titles and Explanation Date Dec. 31, 2020 Prepare any journal entries required for the mine (straight-line depreciation) and the asset retirement obligation at December 31, 2020. The estimated residual value of the mine is zero. (Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation (To record depletion for the year) Debit (To record accretion expense for the year) Credit Debit Credit On April 1, 2030, Ivanhoe paid cash to an environmental firm to restore the mine's surrounding area to its original state at a cost of $487,500. Prepare the journal entry for the settlement of the asset retirement. (Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Date Apr. 1, 2030 Debit Credit Ivanhoe Industries Limited purchased a strip mine for cash on April 1, 2020 at a cost of $5,787,000. Ivanhoe expects to operate the mine for 10 years, at which it is legally required to restore the surrounding area to its original state. It is estimated that it will cost $477,000 to do this at the end of the mine's useful life. The company's year-end is December 31, and Ivanhoe follows ASPE. Prepare the journal entry to record the purchase of the mine and to record the asset retirement obligation for the mine on April 1, 2020. Based on the effective interest rate of 5%, the present value of the asset retirement obligation (i.e., its fair value) on the date of acquisition is $292,837. (Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Apr. 1, 2020 Account Titles and Explanation Date Dec. 31, 2020 Prepare any journal entries required for the mine (straight-line depreciation) and the asset retirement obligation at December 31, 2020. The estimated residual value of the mine is zero. (Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation (To record depletion for the year) Debit (To record accretion expense for the year) Credit Debit Credit On April 1, 2030, Ivanhoe paid cash to an environmental firm to restore the mine's surrounding area to its original state at a cost of $487,500. Prepare the journal entry for the settlement of the asset retirement. (Round answer to 0 decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Date Apr. 1, 2030 Debit Credit

Answer rating: 100% (QA)

1 Date Account title Debit Credit April 1 Plan Assets 5787000 Cash 5787000 To record the mine Plan... View the full answer