Question: Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and development costs totaled $ 8 . 2 million. Extraction activities began on July 1

Schefter Mining operates a copper mine in Wyoming. Acquisition, exploration, and development costs totaled $

8.2

million. Extraction activities began on July

1, 2021 .

After the copper is extracted in approximately six years, Schefter is obligated to restore the land to its original condition, including constructing a park. The company's controller has provided the following three cash flow possibilities for the restoration costs:

Cash Flow Probability

1 .

700, 000 30 %

2 . 800, 000 25 %

3 . 900, 000 45 %

The company's credit

-

adjusted, risk

-

free rate of interest is

5 %,

and its fiscal year ends on December

31 .

What is the book value of the ARO on the

2021

balance sheet?

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