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Cuong Bui Your client, Hazelton Mining, recently entered into an agreement to obtain the rights to operate a coal mine in West Virginia for $15 million. Hazelton incurred development costs of $6 million in preparing the mine for extraction, which began on July 1, 2013. The contract requires Hazelton to restore the land and surrounding area to its original condition after extraction is complete in three years. The company controller, Alice Cushing, is not sure how to account for the restoration costs and has asked your advice. Alice is aware of an accounting standard addressing this issue, but is not sure of its provisions. She has narrowed down the possible cash outflows for the restoration costs to four possibilities: Alice also informs you that the company's credit-adjusted risk-free interest rate is 9%. Before responding to Alice, you need to research the issue. Required: 1. Obtain the relevant authoritative literature on accounting for asset retirement obligations using the FASB's Codification Research System. You might gain access at the FASB website ( www.fasb.org ). ... View Full Document

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