Kryan Corp. mines and produces aluminum. During 2021, the company explored two new sites and evaluated them for aluminum ore potential. By the December 31, 2021 year-end, both sites remained in the evaluation stage. During 2022, evaluation of site Apollo was completed and the site was deemed to have sufficient quantities of ore; consequently, development of the site began. However, site Braeden was determined to have ore concentrations too low to be commercially viable. The following is the cost of exploration and evaluation incurred on the two sites:
$$\begin{array} { | l | r | r | }
\hline & 2021 & 2022 \
\hline \text { Apollo (A Site) } & \$ 1,569,000 & \$ 1,560,000 \
\hline \text { Braeden (B Site) } & \underline { 550,000 } & \underline { 1,275,000 } \
\hline & \$ 2,119,000 & \$ 2,835,000 \
\hline
\end{array}$$ Required:
Record the journal entries in 2021 and 2022 relating to the exploration and evaluation costs using the successful efforts method. Assume that Kryan has a policy of capitalizing the costs of exploration and evaluation.

Question

Kryan Corp. mines and produces aluminum. During 2021, the company explored two new sites and evaluated them for aluminum ore potential. By the December 31, 2021 year-end, both sites remained in the evaluation stage. During 2022, evaluation of site Apollo was completed and the site was deemed to have sufficient quantities of ore; consequently, development of the site began. However, site Braeden was determined to have ore concentrations too low to be commercially viable. The following is the cost of exploration and evaluation incurred on the two sites:
 $$\begin{array} { | l | r | r | } 
\hline & 2021 & 2022 \
\hline \text { Apollo (A Site) } & \$ 1,569,000 & \$ 1,560,000 \
\hline \text { Braeden (B Site) } & \underline { 550,000 } & \underline { 1,275,000 } \
\hline & \$ 2,119,000 & \$ 2,835,000 \
\hline
\end{array}$$ Required:
Record the journal entries in 2021 and 2022 relating to the exploration and evaluation costs using the successful efforts method. Assume that Kryan has a policy of capitalizing the costs of exploration and evaluation.

Quizplus · Accepted Answer

The Answer of Kryan Corp. mines and produces aluminum. During 2021, the company explored two new sites and evaluated them for aluminum ore potential. By the December 31, 2021 year-end, both sites remained in the evaluation stage. During 2022, evaluation of site Apollo was completed and the site was deemed to have sufficient quantities of ore; consequently, development of the site began. However, site Braeden was determined to have ore concentrations too low to be commercially viable. The following is the cost of exploration and evaluation incurred on the two sites:
 $$\begin{array} { | l | r | r | } 
\hline & 2021 & 2022 \
\hline \text { Apollo (A Site) } & \$ 1,569,000 & \$ 1,560,000 \
\hline \text { Braeden (B Site) } & \underline { 550,000 } & \underline { 1,275,000 } \
\hline & \$ 2,119,000 & \$ 2,835,000 \
\hline
\end{array}$$ Required:
Record the journal entries in 2021 and 2022 relating to the exploration and evaluation costs using the successful efforts method. Assume that Kryan has a policy of capitalizing the costs of exploration and evaluation.

Kryan Corp Required: Record the Journal Entries in 2021 and 2022 Relating

Kryan Corp Required:
Record the Journal Entries in 2021 and 2022 Relating