Cabug-Os, Lovely A. (Assignment 9)
Cabug-Os, Lovely A. (Assignment 9)
Cabug-os BSA-2A
Required:
1. Prepare journal entries in 2020 to record the purchase of the mining site and the recognition of the decommissionin
2 . Prepare journal entry to record the settlement of the decommissioning liability on December 31, 2029.
Requirement 1:
2020
Jan 1. Mining site 8,000,000.00
Cash
Mining site 926,400.00
Decommisioning liability
(2,000,000 x .4632)
Dec. 31 Interest Expense 74,112.00
Decommisioning liability
(926,400 x 8%)
Requirement 2:
2029
Dec, 31 Decommisioning liability 2,000,000.00
Cash
Gain on settlement of decommissioning liability
tored to certain specifications when the mining production ceases.
8,000,000.00
926,400.00
74,112.00
1,800,000.00
200,000.00