Maximus Holdings Corp. (MHC) is required to remediate the tailings pond used for nickel mining at the
Question:
Maximus Holdings Corp. (MHC) is required to remediate the tailings pond used for nickel mining at the end of the mine's life, which is 10 years. At initial recognition, MHC estimated the future value of the remediation to be $900,000 and the present value to be $380,170. During the 10 years the mine operates, there are no changes in the estimate of expected future cash flows for the remediation. When MHC completes the remediation after 10 years, the costs incurred are $960,000. Which of the following is included as part of the journal entry to record the decommissioning costs when incurred?
A. DR Loss on decommissioning $60,000
B. CR Decommissioning provision $900,000
C. DR Decommissioning provision $380,170
D. CR Decommissioning costs $380,170
Financial Accounting Theory
ISBN: 9780134166681
8th Edition
Authors: William R. Scott, Patricia O'Brien