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1. Gulf Coast Gas placed on offshore drilling platform into service on June 30, 2020. The platform has an estimated useful life of 10 years.
1. Gulf Coast Gas placed on offshore drilling platform into service on June 30, 2020. The platform has an estimated useful life of 10 years. Gulf Coast is legally required to dismantle the platform at termination of its useful life. Gulf Coast intends to hire a third-party contractor to perform that service. At June 30, 2020, it would cost Gulf Coast $350,000 to dismantle the platform. Gulf Coast estimates those costs will rise by 3% per year over the ten-year life of the asset. Gulf Coast's credit-adjusted risk free interest rate is 6%. Required: 1. Prepare the journal entry to record the asset retirement obligation 2. Assuming the asset retirement obligation was recorded at $270,000 and all else remains the same, prepare the adjusting journal entries necessary at 12/31/20 and 12/31/21. 3. On June 30, 2030, Gulf Coast paid Deveraux Drilling $450,000 to dismantle the platform. Prepare the journal entries necessary to record the settlement of the obligation
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