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#1 Wildcat Oil Company is erecting a drilling platform in the Gulf of Mexico, at a cost of $2,500,000. Wildcat is legally obligated to remove
#1 Wildcat Oil Company is erecting a drilling platform in the Gulf of Mexico, at a cost of $2,500,000. Wildcat is legally obligated to remove the platform at the end of its useful life, which is expected to be 10 years. The cost to dismantle is expected to be $1,000,000. Assuming an interest rate of 8%, the present value of this obligation is 0.46319. At the end of 10 years, the platform is dismantled, at cost of $1,200,000. In the space below, give the journal entries required to record the asset retirement obligation, depreciation of the asset for one year, interest on the retirement obligation, and payment of the cost to dismantle 10 years later. You should record four journal entries
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