On January 1, 2020, Swifty Corporation erected a drilling platform at a cost of $5,678,400. Swifty is legally required to dismantle and remove the platform at the end of its 6 year useful life, at an estimated cost of $988,000. Swifty 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 $33,621 and $36,311, respectively. The estimated residual value of the drilling platform is zero, and Swifty uses straight-line depreciation. Swifty 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. 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, es, 1.25124 and final answers to decimal places, e3.5,275. 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) Account Titles and Explanation Debit Credit Jan. 1. 2020 Date GO To rerned the cost of drilling niatform 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 A2, (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, eg. 1.25124 and final answers to O decimal places, es5,275. 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 entero for the amounts.) Account Titles and Explanation Debit Credit Date Jan. 1, 2020 (To record the cost of drilling platform) Jan 1, 2020 (To recognize the retirement liability) Prepare any journal entries required for the platform and the asset retirement obligation at December 31, 2020. (Round answers to decimal places eg. 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 for the amounts) Account Titles and Explanation Debit Credit Date Dec 31, 2020 (To record depreciation expense) Dec 31, 2020 (To record interest expense) Dec. 31 (To record production of oil inventory) Prepare any journal entries required for the platform and the asset retirement obligation at December 31, 2021. (Round answers to decimal places, es 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 for the amounts) Date Account Titles and Explanation Debit Credit Dec 31, 2021 (To record depreciation expense) Dec. 31, 2021 (To record interest expense) Dec. 31, 2021 (To record production of oil inventory) Assume that on December 31, 2025, Swifty dismantles and removes the platform at a cost of $958,880. Prepare the journal entry to record the settlement of the asset retirement obligation. Also assume its carrying amount at that time is $988,000. (Round answers to decimal places, eg. 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 for the amounts.) Date Account Titles and Explanation Debit Credit Dec 31, 2025 C Prepare the journal entries to record the acquisition of the drilling platform, and the asset retirement obligation for the platform, on January 1, 2020, assuming that Swifty prepares financial statements in accordance with ASPE. An appropriate interest or discount rate is 8%. (Round answers to decimal places, eg,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 for the amounts.) Date Account Titles and Explanation Debit Credit Jan 1, 2020 (To record the cost of drilling platform) Jan 1, 2020 (To recognize the retirement liability) Prepare any journal entries required for the platform and the asset retirement obligation at December 31, 2020, assuming that Swifty prepares financial statements in accordance with ASPE. (Round answers to decimal places, eg. 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 for the amounts) Date Account Titles and Explanation Dec 31, 2020 Debit Credit > (To record depreciation expense) c Dec 31, 2020
