Herb Corporation acquires a gold mine at a cost of $403,000. Development costs t
ID: 2541616 • Letter: H
Question
Herb Corporation acquires a gold mine at a cost of $403,000. Development costs that were incurred total $106,000, including $11,300 of depreciation on movable equipment to construct mine shafts. Based on construction to date, the legal obligation to restore the property after the mine is exhausted has a present value of $74,100. Herb has publicly pledged an additional $21,000 (present value) for improved reclamation of the area surrounding the mine.
Prepare the journal entries to record the cost of the natural resource if Herb prepares financial statements in accordance with IFRS. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
Account Titles and Explanation
Debit
Credit
_____________
______________
(To record purchase of a gold mine.)
_________________
__________________
(To record movable equipment entry.)
____________________
____________________
( To record property reclamation obligation.)
Account Titles and Explanation
Debit
Credit
Explanation / Answer
The journal entries to record the cost of the natural resource if Herb prepares
financial statements in accordance with IFRS
Account Titles & explanations
Debit
Credit
Gold mine
$403,000
Cash
$403,000
(To record purchase of gold mine)
Gold Mine
$94,700
Cash
$94,700
(To record development cost of mine)
Depreciation
$11,300
Accumulated Depreciation
$11,300
(To record depreciation for movable equipment)
Gold mine
$95,100
Property reclamation obligation
$95,100
(To record property reclamation obligation)
Property reclamation obligation is the present value of the future cost
to restore the property after the mine is exhaust. This cost is debited to the
mine cost
Legal obligation
$74,100
Publicaly pledged additional cost
$21,000
Total Property reclamation obligation
$95,100
The journal entries to record the cost of the natural resource if Herb prepares
financial statements in accordance with IFRS
Account Titles & explanations
Debit
Credit
Gold mine
$403,000
Cash
$403,000
(To record purchase of gold mine)
Gold Mine
$94,700
Cash
$94,700
(To record development cost of mine)
Depreciation
$11,300
Accumulated Depreciation
$11,300
(To record depreciation for movable equipment)
Gold mine
$95,100
Property reclamation obligation
$95,100
(To record property reclamation obligation)
Property reclamation obligation is the present value of the future cost
to restore the property after the mine is exhaust. This cost is debited to the
mine cost
Legal obligation
$74,100
Publicaly pledged additional cost
$21,000
Total Property reclamation obligation
$95,100
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.