A firm incurred the $100,000 in acquisition costs, $70,000 in exploration costs, $150,000 in development costs, and $80,000 in restoration costs. It expects to recover 500,000 units of natural resources from the project. Record the journal entries for the following events and explain how you calculated your amounts. Assume the firm expects a successful project and capitalizes acquisition costs.
Note the text does not walk you through the recording of each of these events but gives you the information you need to figure out how to prepare the journal entries. Note that the text does not have examples of most of these and I am asking you to determine what the entry might be from the verbal description of the recording in the text.
a) Completion of all acquisition activities.
b) Completion of exploration.
c) Completion of development
d) Completion of restoration
e) Prepares a balance sheet after selling 50,000 units of the natural resource
f) Provide a conceptual discussion of how the firm would revise the accounting for the natural resource if it determined that it would only be able to recover 400,000 units of the natural resource
g) Assume this is a small firm and their sole investment was in this project and decided to return part of the stockholders' capital investment to them. It paid them a cash dividend of $150,000, $50,000 was a return on their investment and $100,000 was based on accumulated earnings from the project. Prepare the journal entry to record this dividend and explain how you determine the amounts.
