On March 1, 2021, Shipley Resources entered into an agreement with the state of Alaska to obtain
the rights to operate a mineral mine for $6 million. The mine is expected to produce 100,000 tons
of mineral. As part of the agreement, Shipley agrees to restore the land to its original condition
after mining operations are completed in approximately five years. Management has provided the
following possible outflows for the restoration costs that will occur five years from now:
Cash Outflow Probability
$ 300,000 25 %
400,000 50 %
500,000 25 %
Shipley's credit-adjusted risk-free interest rate is 10%. During 2021, Shipley extracted 18,000 tons
of ore from the mine. How much accretion expense will the company record in its income
statement for the 2021 calendar year?