Reference no: EM132954760

Question - Shaun Spencer purchases a copper mine for $2,000,000 and spends $500,000 getting the mine ready to use. He expects to extract 30,000 tons of copper from the mine. The land has no residual value but cleanup costs in 10 years are expected to total $500,000. In the first year, they extract 10,000 tons of gold and sell 8,000 tons. It costs $3.50 per ton to extract the gold.

What is the book value of the asset retirement obligation after 2 years? Use a positive number for a debit balance and a negative number for a credit balance.