Reference no: EM133116182

Question 1 - Part I - In January 2018, Benjamin Corporation purchased a silver mine for $9,000,000. Benjamin estimates that the amount of removable silver in the mine is approximately 1,000,000 ounces. The company incurred $850,000 of intangible development costs to prepare the mine for excavation. Benjamin is required by law to restore the land to an acceptable condition after mining is complete at an estimated cost of $625,000. Benjamin estimates it will be able to sell the land after restoration efforts for $350,000. During 2018, 125,000 ounces of silver were removed from the mine and 100,000 ounces were sold.

Required - Compute Benjamin's depletion of the silver mine for 2018 and prepare the journal entry to record the removal of coal from the mine in 2018.

Part II - Globaltel Corporation puchased a plot of land for $100,000 in cash and a $600,000 face amount zero-interest bearing note payable to the seller. On the date of the transaction, the present value of the note at the market rate of interest for similar debt was $495,900, which equals its fair value. A recent appraisal of the land valued it at $625,000.

Required - Show Globaltel's journal entry to record its purchase of the land.