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How much accretion expense will be recorded for first year

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Problem 1: XYZ Inc set up and started a mining operation on April 1 at a cost of $8,186,400. The company is legally required to dismantle and remove the operation at the end of its nine-year useful life. The company estimates that it will cost $716,800 to dismantle and remove the operation at the end of its useful life and that the discount rate to use should be 7.00%. Assume that the discount rate results in a present value factor of 0.54393 at the time of setup and start. (Assume that none of the asset retirement cost relates to production.) How much accretion expense will be recorded for the first fiscal year? The company has a December 31 fiscal year end and follows ASPE.

Reference no: EM132829413

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