Use Microsoft Excel for Answers and Solutions. PROBLEM 2 A Company acquired a tract...
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PROBLEM 2 A Company acquired a tract of land containing an extractable natural resource. The entity is required by the contract to restore the land to a condition suitable for recreational use after it had extracted the natural resource. Geological survey indicated that the recoverable reserves will be 1,000,000 tons and that the extraction will be completed in 10 years. Acquisition cost 9,000,000 Exploration and development costs 1,000,000 Expected cash flow for restoration cost 1,500,000 Credit-adjusted risk free interest rate 12% Using a PV of 4 decimal points, determine: (1) Total depletable cost, beginning of year (2)Depletion expense for the current year (3) Carrying amount of wasting asset, end of year
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