On May, 1, 2020, Star Mines Inc. purchased an ore mine for $2,400,000 to access an estimated 1,244,000 tons of ore. The company incurred development costs of $180,000 related to the mine and purchased equipment for the mine for $360,000 with a useful life of 8 years. The equipment has no use outside of this mine project. The company is expected to restore the land for alternative uses after mining is complete. The present value of the restoration cost is estimated to be $80,000. The company extracted 144,000 tons of ore in 2020 and sold 120,000 tons. Round the depletion rate to two decimals used in your calculations. The ore mine should be recorded at O $2,660,000. O $2,580,000. O None of the other answers is correct. O $2,400,000.
On May, 1, 2020, Star Mines Inc. purchased an ore mine for $2,400,000 to access an estimated 1,244,000 tons of ore. The company incurred development costs of $180,000 related to the mine and purchased equipment for the mine for $360,000 with a useful life of 8 years. The equipment has no use outside of this mine project. The company is expected to restore the land for alternative uses after mining is complete. The present value of the restoration cost is estimated to be $80,000. The company extracted 144,000 tons of ore in 2020 and sold 120,000 tons. Round the depletion rate to two decimals used in your calculations. The ore mine should be recorded at O $2,660,000. O $2,580,000. O None of the other answers is correct. O $2,400,000.
Chapter11: Long-term Assets
Section: Chapter Questions
Problem 6PA: Gimli Miners recently purchased the rights to a diamond mine. It is estimated that there are one...
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![On May, 1, 2020, Star Mines Inc. purchased an ore mine for $2,400,000 to access an estimated 1,244,000 tons of ore. The
company incurred development costs of $180,000 related to the mine and purchased equipment for the mine for $360,000
with a useful life of 8 years. The equipment has no use outside of this mine project. The company is expected to restore the land
for alternative uses after mining is complete. The present value of the restoration cost is estimated to be $80,000. The company
extracted 144,000 tons of ore in 2020 and sold 120,000 tons. Round the depletion rate to two decimals used in your
calculations.
The ore mine should be recorded at
O $2,660,000.
O $2,580,000.
O None of the other answers is correct.
O $2,400,000.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F31595d62-c93a-49e9-8840-c3ca2999866c%2F9f99b9e1-56ca-4dcc-b57c-ba4eb7a5b1dc%2Fu9s4yzo_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On May, 1, 2020, Star Mines Inc. purchased an ore mine for $2,400,000 to access an estimated 1,244,000 tons of ore. The
company incurred development costs of $180,000 related to the mine and purchased equipment for the mine for $360,000
with a useful life of 8 years. The equipment has no use outside of this mine project. The company is expected to restore the land
for alternative uses after mining is complete. The present value of the restoration cost is estimated to be $80,000. The company
extracted 144,000 tons of ore in 2020 and sold 120,000 tons. Round the depletion rate to two decimals used in your
calculations.
The ore mine should be recorded at
O $2,660,000.
O $2,580,000.
O None of the other answers is correct.
O $2,400,000.
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