In: Accounting
Black Mountain Ski Resort has been granted a 20 - year permit to develop and operate a skiing operation in a national park. After 20 years the site must be returned to its original condition. The roads may remain, as they can be used for fire prevention purposes. In the spring and summer before the ski hill opened, the following transactions and events occurred:
You must use the following Long-Lived asset accounts
Ski Lift
Ski Chalet
Land improvement
Roads
Parking lot
Using Straight Line Depreciation record the depreciation for the first year of operations on the Long-Lived assets and site restoration costs. Put all the depreciation expense in one account and then create accumulated depreciation accounts for each asset that requires depreciation.
Allocate the interest expense on the site restoration costs for the first three years
Using the table below prepare the balance sheet presentation of all the accounts involved in this question for the end of the third year of operations.
Cost |
Accumulated Depreciation |
Net Carrying Amount |
|
Property Plant and Equipment |
|||
Ski Lift |
|||
Ski Chalet |
|||
Land Improvement |
|||
Roads |
|||
Parking Lot |
|||
Site Restoration Costs |
|||
Total Property Plant and Equipment |
Long Term Liabilities
Obligation for future restoration =
At the end of the project the actual cost of restoring the site is $43,000,000, as originally estimated. Prepare the journal entry to record the payment of these costs at the end of the project
Date |
Explanation/ Account |
Debit |
Credit |
what would be the total expenses associated with the site restoration in the first, second and 20th year?
Year |
Depreciation of Site Restoration Costs |
Interest expense accrual on obligation for future site restoration |
Total Expense relating to site restoration |
1 |
|||
2 |
|||
20 |
Calculations