Capitalize and depreciate them over the estimated life

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Reference no: EM13135700

LoJo Developers Inc. purchased a coal mine for $10,000,000. As a condition of the purchase, LoJo agreed to restore the land after mining operations ceased. Restoration costs are estimated at $2,500,000. The proper accounting for these restoration costs is: (Points: 10)
Expense them as incurred.

Capitalize and depreciate them over the estimated life of the mine.

Add them into the depletion base of the mine.

Subtract them from the depletion base of the mine.

Reference no: EM13135700

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