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Minnesota Mining paid $600,000 to obtain the rights to mine on a piece of land....

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Accounting

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Minnesota Mining paid $600,000 to obtain the rights to mine on a piece of land. Costs of exploring totaled $1,200,000 of which $500,000 was incurred on unsuccessful sites. Intngible development costs were $800,000 and incurred in preparing the extraction, which began on January 2, 2021 and is expected to take five years after which Minnesota Mining is obligated to restore the land to its original condition. The company estimates that the project will produce 5,000,000 pounds of iron ore and the restoration costs will be $1,500,000 at the end of the project. Reinsurance Ync. offered to assume the restoration for a current payment of $900,000. The company's borrowing rate is 6%. In 2021 Required: 1. What amount should be capitalized in the Natural Resources account assuming that the company uses successful efforts? 2. What amount should be capitalized in the Natural Resources account assuming that the company uses full=costing? 3. What is the depletion amount for 2021 if successful efforts is used and 800,000 pounds is extracted in 2021. (Assume no salvage value)

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