On January 1^st, 2008, ABC Inc

question 202

Essay

On January 1^st, 2008, ABC Inc. purchased a copper mine for $400,000. The company is required by provincial law to restore the land on which the mine is located to its initial condition at the end of the mine's ten year useful life. Restoration costs are estimated to be $35,000. ABC is subject to an interest rate of 5%. Prepare the journal entries required on January 1^st and December 31^st, 2008. Round all entries to the nearest dollar.

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Definitions:

LLC

Limited Liability Company, a business structure in the United States that protects its owners from personal responsibility for its debts or liabilities.

Joint Venture

A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task.

Syndicate

An investment group that comes together for the explicit purpose of financing a specific large project.

Limited Partnership

A business structure where at least one general partner manages the business and is personally liable, while limited partners provide capital but have limited liability.