On January 1, 2020, Oilers Corp. (Oilers) in Alberta purchased an oil tanker depot for $ 1,200,000 cash. The company enters a contract with the province of Alberta to operate the depot for eight years, at which time they will be legally required to dismantle the structure and remove the underground storage tanks. Oilers estimate this asset retirement obligation (ARO) will cost $600,000 and will take one year to complete the obligations.

Oilers expect the revenue generated from this depot to be evenly distributed over the eight years and believe that 5% is the appropriate discount rate. Oilers Corp. is a public company, follows straight-line depreciation and uses the calendar year as its fiscal year.

Round all dollar values to the nearest dollar.

1. Prepare the journal entries to be recorded on January 1, 2020
2. Prepare the journal entries to be recorded on December 31, 2020.
3. With proper title and format, show the amounts and accounts to be reported on Oilers Corp.'s partial classified statement of financial position on December 31, 2020.