Sauer Oil and Gas Company constructed a natural gas treatment facility in three phases. The first phase was completed and placed into service on December 31, 2018. The second phase was completed and placed into service on December 31, 2019, and the third phase was completed and placed into service on December 31, 2020. Sauer is legally required to decommission the plant at the end of its useful life, which is estimated to be 20 years from the date that the first phase went into service. The following schedule reflects the undiscounted expected cash flows and respective credit-adjusted risk-free rates used to measure each portion of the liability through December 31, 2020. (The undiscounted cash flows below have already been adjusted for market risk premium and inflation and already incorporate labor costs, overhead, and a profit margin. They have not been discounted.)

On December 31, 2020, the entity increases by 10% its estimate of undiscounted expected cash flows that were used to measure those portions of the liability recognized on December 31, 2018, and December 31, 2019.

REQUIRED: Make the journal entries necessary to record the asset retirement obligation and any DD&A expense related to the ARO and accretion expense for the following dates:

a. December 31, 2018

b. December 31, 2019

c. December 31, 2020

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Date 12/31/18 12/31/19 12/31/20 Undiscounted Expected Cash Flows $100,000 90,000 50,000 Credit-Adjusted Risk-Free Rate 9.0% 8.0% 7.0%