Sheridan Products Limited leases property on which copper has been discovered. The lease provides for an immediate payment of $471,500 to the lessor before drilling has begun and an annual rental of $54,720. In addition, the lessee is responsible for cleaning up the waste and debris from drilling and for the costs of reconditioning the land for farming when the mine is abandoned. It is estimated that the legal obligation related to cleanup and reconditioning has a present value of $45,500. Sheridan Products has publicly pledged an additional $29,780 (present value) to reclaim the area surrounding the mine. Sheridan Products prepares financial statements in accordance with IFRS. Determine the amount that should be capitalized in the Mineral Resources asset account as a result of the lease agreement, assuming Sheridan Products prepares financial statements in accordance with ASPE. Amount capitalized $ 546780

Sheridan Products Limited leases property on which copper has been discovered. The lease provides for an immediate payment of $471,500 to the lessor before drilling has begun and an annual rental of $54,720. In addition, the lessee is responsible for cleaning up the waste and debris from drilling and for the costs of reconditioning the land for farming when the mine is abandoned. It is estimated that the legal obligation related to cleanup and reconditioning has a present value of $45,500. Sheridan Products has publicly pledged an additional $29,780 (present value) to reclaim the area surrounding the mine. Sheridan Products prepares financial statements in accordance with IFRS. Determine the amount that should be capitalized in the Mineral Resources asset account as a result of the lease agreement, assuming Sheridan Products prepares financial statements in accordance with ASPE. Amount capitalized $ 546780

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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