Reference no: EM132991180

Questions -

Q1. Mine Co. owns a gold mine and began production on January 1, 2020. The province requires mining companies to return the land to its natural state at the end of mining activity. Mine Co. estimates that it will operate the mine for 20 years, at which time it will cost $5,000,000 to restore the land. Mine Co. uses an 8% discount rate, and follows ASPE.

a) Record any entry needed at January 1, 2020.

b) Record any entry needed at Mine Co.'s year end of December 31, 2020.

Q2. Strang Co. offers an employee parental leave plan as well as a sick leave plan. At December 31, 2020 the following situations exist: i) 10% of the 150 employee positions are expected to take parental leave over the next 30 years at a cost of $20,000 for each employee taking the leave. One employee is currently on parental leave with $4,000 paid to date. ii) Employees are allowed 6 paid sick days per year. The average employee makes $250 per day. Employees with unused sick days from one year may take half of the unused days in the next year as sick days or as personal days off (personal days are used during the second half of the year, which are always then taken). This amount is not paid out to employees if they leave, but 80% of employees are expected to remain throughout 2021. 50 sick days in total were unused in 2020.

For each item above, indicate the amount of liability (if any) for Strang Co. at December 31, 2020. In point form, briefly explain the logic for your liability.