Answer:
(1) $3.5 million
(2) $1.5 million
Explanation:
The account of natural resources is compounded by the duty to sell the properties, which is the present value of the $5 million to be paid later, or $3.5 million.
Total depletion over most of the life of the project thus increases by this number. Accretion expense is the growth in the obligation over time.
The $3.5 million amount will increase to $5 million in five years, and at that time that amount's expended.
