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On April 30, 2020, Canuck Oil Corp. purchased an oil tanker depot for $1,200,000 cash. The company expects to operate this depot for eight years,
On April 30, 2020, Canuck Oil Corp. purchased an oil tanker depot for $1,200,000 cash. The company expects to operate this depot for eight years, at which time they will be legally required to dismantle the structure and remove the underground storage tanks. Canuck Oil estimates this asset retirement obligation (ARO) will cost $200,000.
Assuming a 5% discount rate, to the nearest dollar, the amount to be recorded as the ARO is
| $135,368. |
| $150,000. |
| $295,491. |
| $25,000. |
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