Steep Mountain Ski Resort has been granted a 20-year permit to develop and operate a snow 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:
i.Installed three ski lifts for a total cost of $120,000,000.
ii.Built a ski chalet for $60,000,000.
iii. Removed trees and cleared the area for ski runs at a cost of $20,000,000.
iv. Received $8,000,000 for the trees that were removed for the ski runs.
v. Put in roads for a cost of $68,000,000.
vi. Paved an area at the base of the mountain for a parking lot at a cost of $11,000,000.
vii. Estimated that it would cost $36,000,000 to dismantle the ski lifts in 20 years but that these lifts could be sold as scrap steel for $2,000,000. The chalet could be removed for $24,000,000. Reforesting the site would cost $7,000,000. Removing the parking lot will cost $3,800,000.
Required:
a. Prepare journal entries to record transactions i. to vi.
b. Prepare a journal entry to record transaction vii. Assume all these costs will be set up in a single account called "site restoration cost." Assume a 6% discount rate. Round to the nearest dollar.
c. Record all year-end journal entries for the above items for the first year of operations. The company uses straight-line depreciation for all assets. Round to the nearest dollar.

Question

Steep Mountain Ski Resort has been granted a 20-year permit to develop and operate a snow 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:
i.Installed three ski lifts for a total cost of $120,000,000.
ii.Built a ski chalet for $60,000,000.
iii.	Removed trees and cleared the area for ski runs at a cost of $20,000,000.
iv.	Received $8,000,000 for the trees that were removed for the ski runs.
v.	Put in roads for a cost of $68,000,000.
vi.	Paved an area at the base of the mountain for a parking lot at a cost of $11,000,000.
vii.	Estimated that it would cost $36,000,000 to dismantle the ski lifts in 20 years but that these lifts could be sold as scrap steel for $2,000,000. The chalet could be removed for $24,000,000. Reforesting the site would cost $7,000,000. Removing the parking lot will cost $3,800,000.
Required:
a. Prepare journal entries to record transactions i. to vi.
b. Prepare a journal entry to record transaction vii. Assume all these costs will be set up in a single account called "site restoration cost." Assume a 6% discount rate. Round to the nearest dollar.
c. Record all year-end journal entries for the above items for the first year of operations. The company uses straight-line depreciation for all assets. Round to the nearest dollar.

Quizplus · Accepted Answer

The Answer of Steep Mountain Ski Resort has been granted a 20-year permit to develop and operate a snow 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:
i.Installed three ski lifts for a total cost of $120,000,000.
ii.Built a ski chalet for $60,000,000.
iii.	Removed trees and cleared the area for ski runs at a cost of $20,000,000.
iv.	Received $8,000,000 for the trees that were removed for the ski runs.
v.	Put in roads for a cost of $68,000,000.
vi.	Paved an area at the base of the mountain for a parking lot at a cost of $11,000,000.
vii.	Estimated that it would cost $36,000,000 to dismantle the ski lifts in 20 years but that these lifts could be sold as scrap steel for $2,000,000. The chalet could be removed for $24,000,000. Reforesting the site would cost $7,000,000. Removing the parking lot will cost $3,800,000.
Required:
a. Prepare journal entries to record transactions i. to vi.
b. Prepare a journal entry to record transaction vii. Assume all these costs will be set up in a single account called "site restoration cost." Assume a 6% discount rate. Round to the nearest dollar.
c. Record all year-end journal entries for the above items for the first year of operations. The company uses straight-line depreciation for all assets. Round to the nearest dollar.

Steep Mountain Ski Resort Has Been Granted a 20-Year Permit