On December 31, 2020, a company invested $2,150,000 in an asset. The company estimates that 3,000,000 tonnes will be excavated over the 20 year life of the asset. In order to decommission the asset at the end of the useful life it is estimated that it will cost $485,000. The depreciation method is based on units of production method. The relevant discount rate is 6%. A total of 220,000 tonnes and 205,000 tonnes were excavated in 2021 and 2022 respectively. Required Prepare all journal entries required for the years ended December 31, 2020, 2021 and 2022. (HINT: include the original purchase journal entry and subsequent depreciation and interest entries.)

On December 31, 2020, a company invested $2,150,000 in an asset. The company estimates that 3,000,000 tonnes will be excavated over the 20 year life of the asset. In order to decommission the asset at the end of the useful life it is estimated that it will cost $485,000. The depreciation method is based on units of production method. The relevant discount rate is 6%. A total of 220,000 tonnes and 205,000 tonnes were excavated in 2021 and 2022 respectively. Required Prepare all journal entries required for the years ended December 31, 2020, 2021 and 2022. (HINT: include the original purchase journal entry and subsequent depreciation and interest entries.)

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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