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Fall 2020 4. Haverford and Meagle Co purchased the rights to a diamond mine for...

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Accounting

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Fall 2020 4. Haverford and Meagle Co purchased the rights to a diamond mine for $2,000,000 (cash) and spent $1,000,000 (cash) on exploration and development on Jan 1, 2019. After extraction is complete in 6 years, Haverford and Meagle is responsible for restoring the land to its original condition. Estimates for the cost of this restoration and their probabilities are provided below. The appropriate credit-adjusted interest rate for Haverford and Meagle is 8%. Scenario A B Cash Outflow $1M $2M $4M Probability 50% 25% 25% a) (1 pt) Record the journal entry Haverford and Meagle for the acquisition of the mine. b) (1 pt) Record the journal entry Haverford and Meagle should make related to the ARO on December 31, 2020 (at the end of the 2nd year)

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