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-blems (chapters 10,11,13) Saved Help Save & Exit Check my On May 1, 2024, Hecala Mining entered into an agreement with the state of New Mexico to obtain the rights to operate a minera in New Mexico for $10.7 million. Additional costs and purchases included the following. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Development costs in preparing the mine $ 3,900,000 Mining equipment Construction of various structures on site 167,600 104,400 After the minerals are removed from the mine, the equipment will be sold for an estimated residual value of $11,000. The structur be torn down. Geologists estimate that 870,000 tons of ore can be extracted from the mine. After the ore is removed, the land will revert back to state of New Mexico. The contract with the state requires Hecala to restore the land to its original condition after mining operations are completed in approximately four years. Management has provided the following possible outflows for the restoration costs: Cash Outflow $ 670,000 770,000 870,000 Probability 30% 40% 30% Hecala's credit-adjusted risk-free interest rate is 9%. During 2024, Hecala extracted 127,000 tons of ore from the mine. The compa fiscal year ends on December 31. Required: 1. Determine the amount at which Hecala will record the mine. 2. Calculate the depletion of the mine and the depreciation of the mining facilities and equipment for 2024, assuming that Heca uses the units-of-production method for both depreciation and depletion. 3. How much accretion expense will the company record in its income statement for the 2024 fiscal year? 4. Are depletion of the mine and depreciation of the mining facilities and equipment reported as separate expenses in the incon

-blems (chapters 10,11,13) Saved Help Save & Exit Check my On May 1, 2024, Hecala Mining entered into an agreement with the state of New Mexico to obtain the rights to operate a minera in New Mexico for $10.7 million. Additional costs and purchases included the following. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Development costs in preparing the mine $ 3,900,000 Mining equipment Construction of various structures on site 167,600 104,400 After the minerals are removed from the mine, the equipment will be sold for an estimated residual value of $11,000. The structur be torn down. Geologists estimate that 870,000 tons of ore can be extracted from the mine. After the ore is removed, the land will revert back to state of New Mexico. The contract with the state requires Hecala to restore the land to its original condition after mining operations are completed in approximately four years. Management has provided the following possible outflows for the restoration costs: Cash Outflow $ 670,000 770,000 870,000 Probability 30% 40% 30% Hecala's credit-adjusted risk-free interest rate is 9%. During 2024, Hecala extracted 127,000 tons of ore from the mine. The compa fiscal year ends on December 31. Required: 1. Determine the amount at which Hecala will record the mine. 2. Calculate the depletion of the mine and the depreciation of the mining facilities and equipment for 2024, assuming that Heca uses the units-of-production method for both depreciation and depletion. 3. How much accretion expense will the company record in its income statement for the 2024 fiscal year? 4. Are depletion of the mine and depreciation of the mining facilities and equipment reported as separate expenses in the incon

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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-blems (chapters 10,11,13) Saved Help Save & Exit Check my On May 1, 2024, Hecala Mining entered into an agreement with the state of New Mexico to obtain the rights to operate a minera in New Mexico for $10.7 million. Additional costs and purchases included the following. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Development costs in preparing the mine $ 3,900,000 Mining equipment Construction of various structures on site 167,600 104,400 After the minerals are removed from the mine, the equipment will be sold for an estimated residual value of $11,000. The structur be torn down. Geologists estimate that 870,000 tons of ore can be extracted from the mine. After the ore is removed, the land will revert back to state of New Mexico. The contract with the state requires Hecala to restore the land to its original condition after mining operations are completed in approximately four years. Management has provided the following possible outflows for the restoration costs: Cash Outflow $ 670,000 770,000 870,000 Probability 30% 40% 30% Hecala's credit-adjusted risk-free interest rate is 9%. During 2024, Hecala extracted 127,000 tons of ore from the mine. The compa fiscal year ends on December 31. Required: 1. Determine the amount at which Hecala will record the mine. 2. Calculate the depletion of the mine and the depreciation of the mining facilities and equipment for 2024, assuming that Heca uses the units-of-production method for both depreciation and depletion. 3. How much accretion expense will the company record in its income statement for the 2024 fiscal year? 4. Are depletion of the mine and depreciation of the mining facilities and equipment reported as separate expenses in the incon
Transcribed Image Text:-blems (chapters 10,11,13) Saved Help Save & Exit Check my On May 1, 2024, Hecala Mining entered into an agreement with the state of New Mexico to obtain the rights to operate a minera in New Mexico for $10.7 million. Additional costs and purchases included the following. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Development costs in preparing the mine $ 3,900,000 Mining equipment Construction of various structures on site 167,600 104,400 After the minerals are removed from the mine, the equipment will be sold for an estimated residual value of $11,000. The structur be torn down. Geologists estimate that 870,000 tons of ore can be extracted from the mine. After the ore is removed, the land will revert back to state of New Mexico. The contract with the state requires Hecala to restore the land to its original condition after mining operations are completed in approximately four years. Management has provided the following possible outflows for the restoration costs: Cash Outflow $ 670,000 770,000 870,000 Probability 30% 40% 30% Hecala's credit-adjusted risk-free interest rate is 9%. During 2024, Hecala extracted 127,000 tons of ore from the mine. The compa fiscal year ends on December 31. Required: 1. Determine the amount at which Hecala will record the mine. 2. Calculate the depletion of the mine and the depreciation of the mining facilities and equipment for 2024, assuming that Heca uses the units-of-production method for both depreciation and depletion. 3. How much accretion expense will the company record in its income statement for the 2024 fiscal year? 4. Are depletion of the mine and depreciation of the mining facilities and equipment reported as separate expenses in the incon
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