Beau Lac Mining Ltd. paid $900,000 for the right to extract ore from a 300,000-tonne mineral…

Beau Lac Mining Ltd. paid $900,000 for the right to extract ore from a 300,000-tonne mineral deposit. In addition to the purchase price, the company also paid a $1,000 filing fee, a $5,000 licence fee to the province of Quebec, and $75,000 for a geological survey. Because Beau Lac Mining Ltd. purchased the rights to the minerals only, the company expected the asset to have zero residual value when fully depleted. During the first year of production, the company removed 65,000 tonnes of ore. Make general journal entries to record (a) Purchase of the mineral rights (debit Mineral Asset) on January 1, 2017; (b) Payment of fees and other costs on January 1, 2017; and (c) Amortization for first-year production as at December 31, 2017.

 

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