On January $1,$ Marshall Inc. purchased equipment for $$1,000,000$ that was to be used in various toxic chemical processes. The asset has a useful life of $20$ years. Additionally, Marshall estimates that it will cost $$100,000$ to remove the asset and restore the site to a suitable use. Based on Marshall$$s $10\%$ discount rate, the present value of these future restoration costs at the time the equipment is purchased is $$14,864.$

Required:

Prepare the entry to record the acquisition of the asset.

Prepare the entry to record the acquisition of the asset on January $1.$

General Journal Instructions

DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT

Jan. $1$

Equipment

Cash

Asset Retirement Obligation