On January 1, 2020, Sheffield Corporation erected a drilling platform at a cost of $5,623,800. Sheffield is legally required to dismantle and remove the platform at the end of its 6 year useful life, at an estimated cost of $978,500. Sheffield estimates that 70% of the cost of dismantling and removing the platform is caused by acquiring the asset itself, and that the remaining 30% of the cost is caused by using the platform in production. The present value of the increase in asset retirement obligation related to the production of oil in 2020 and 2021 was $33,298 and $35,961, respectively. The estimated residual value of the drilling platform is zero, and Sheffield uses straight-line depreciation. Sheffield prepares financial statements in accordance with IFRS. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Your answer is partially correct. Prepare the journal entries to record the acquisition of the drilling platform, and the asset retirement obligation for the platform, on January 1, 2020. An appropriate interest or discount rate is 8%. Use (1) factor Table A.2, (2) a financial calculator, or (3) Excel function PV in your calculations. (Hint: For a review of present value concepts, see Chapter 3 of Volume 1.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Jan. 1, 2020 Account Titles and Explanation Drilling Platform Debit 5623800 Credit Cash (To record the cost of drilling platform) 5623000