Business, 25.11.2019 21:31 lohnnaw4813

Montana mining co. (mmc) paid $200 million for the right to explore and extract rare metals from land owned by the state of montana. to obtain the rights, mmc agreed to restore the land to a suitable condition for other uses after its exploration and extraction activities. mmc incurred exploration and development costs of $60 million on the project. mmc has a credit-adjusted risk free interest rate of 7%. it estimates the possible cash flows for restoring the land, 3 years after extraction activities begin, as follows:

cash outflow probability

$10 million 60%

$30 million 40%

the asset retirement obligation (rounded) that should be recognized at the beginning of the extraction activities is: ? ?
the asset retirement obligation (rounded) that should be reported on the balanace sheet one year after activities begin is: ? ?

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Montana mining co. (mmc) paid $200 million for the right to explore and extract rare metals from lan...

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