Exercise 13-14 Pharoah Company purchases an oil tanker depot on January 1, 2017, at a cost of $652,100. Pharoah 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 $72,300 to dismantle the depot and remove the tanks at the end of the depots useful life. Partially correct answer. Your answer is partially correct. Try again. Prepare the journal entries to record the depot (considered a plant asset) and the asset retirement obligation for the depot on January 1, 2017. Based on an effective-interest rate of 6%, the present value of the asset retirement obligation on January 1, 2017, is $40,372. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit January 1, 2017 Entry field with incorrect answer Entry field with incorrect answer Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with incorrect answer (To record the depot) January 1, 2017 Entry field with incorrect answer Entry field with incorrect answer Entry field with correct answer Entry field with correct answer Entry field with correct answer Entry field with incorrect answer (To record the asset retirement obligation) SHOW LIST OF ACCOUNTS LINK TO TEXT Incorrect answer. Your answer is incorrect. Try again. Prepare any journal entries required for the depot and the asset retirement obligation at December 31, 2017. Pharoah uses straight-line depreciation; the estimated salvage value for the depot is zero. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit December 31, 2017 Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer (To record depreciation for the depot) December 31, 2017 Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer (To record depreciation on asset retirement obligation) December 31, 2017 Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer (To record interest on asset retirement obligation) SHOW LIST OF ACCOUNTS LINK TO TEXT Incorrect answer. Your answer is incorrect. Try again. On December 31, 2026, Pharoah pays a demolition firm to dismantle the depot and remove the tanks at a price of $80,920. Prepare the journal entry for the settlement of the asset retirement obligation. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit December 31, 2026 Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer Entry field with incorrect answer