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Ayayal Company purchases an oil tanker depot on January 1, 2022. at a cost of $588.000. Ayayai expects to operate the depot for 10 years,

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Ayayal Company purchases an oil tanker depot on January 1, 2022. at a cost of $588.000. Ayayai expects to operate the depot for 10 years, at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that it will cost $68,600 to dismantle the depot and remove the tanks at the end of the depot's useful life. Date Account Titles and Explanation Debit Credit December 31.2022 Depreciation Expense Accumulated Depreciation-Depot (To record depreciation for the depot) December 31, 2022 Depreciation Expense (To record depreciation on environmental liability) December 31. 2022 Interest Expense Environmental Liability (To record interest on environmental liability) Show Atleme History Current Attempt in Progress Ayayal Company purchases an oil tanker depot on January 1, 2022. at a cost of $88.000 Ayai pects to operate the depot for 10 years at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that will cost $68,600 to dismantle the depot and remove the tanks at the end of the deposit TOUWE 15 LEC Prepare the journal entries to record the depot and the environmental liability for the depot on January 1, 2022. Based on an effective interest rate of 6%, the fair value of the environmental liability on January 1, 2022, is $38,306. Of no entry is required, select "No Entry" for the account titles and enter for the amounts Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation 588000 January 1,2022 Depot 588000 Cash (To record the depot) 38306 January 1.2022 Depot 38306 Environmental Liability (To record the environmental liability)

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