Reference no: EM132678741

In addition to the information stated inabove, now assume the company had further determined that additional restoration costs would have to be paid at the end of the project. These costs, estimated at $280,000, were for theThe company attributed these costs to the using of some of the mining equipment outside the mine during the production process. It was also decided that the entire additional costs for the full year were to be recorded at the end of 2017 on December 31. Finally, assume, for this section only, CMC had been using ASPE instead of IFRS.

Problem 1: The journal entry required on December 31, 2017 to record the additional costs of $280,000 would be:

a. Accretion Expense ...... DR $280,000; Asset Retirement Obligation ...... CR $280,000

b. Loss on Land Restoration ...... DR $280,000; Asset Retirement Obligation ...... CR $280,000

c. Manufacturing Overhead ...... DR $96,608; Asset Retirement Obligation ...... CR $96,608

d. Plant and Equipment - Mining ...... DR $98,095; Asset Retirement Obligation ...... CR $98,095

e. Plant and Equipment - Mining ...... DR $96,608; Asset Retirement Obligation ...... CR $96,608

Problem 2: Determine the amount of the annual depreciation expense which the company would record for the year 2018 using the straight line method.

a. $5,378.

b. $158,268.

c. $882,007.

d. $876,640.

e. None of the above.