Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On January 1 of the current year,Mooney Oil invested $8,000,000 to construct an offshore oil platform, and paid cash. As part of its offshore drilling

On January 1 of the current year,Mooney Oil invested $8,000,000 to construct an offshore oil platform, and paid cash. As part of its offshore drilling agreement, Mooney is responsible for dismantling and removing the platform at the end of its 15-year useful life. Mooney depreciates the platform by using the straight-line method with no residual value expected at the end of its useful life. The estimated values are as follows:

Estimated Future Cash Flows Probability of Occurrence

$580,000 65%

$780,000 33%

$1,020,000 2%

The company's estimated cost of capital is 7%

Requirement a. Prepare the journal entries required to record the investment in the offshore oil platform.

Requirement b. Prepare the journal entry to record the first years depreciation and accretion accrual.

Requirement c. Prepare the journal entries required to record the disposal o the asset and the settlement of the asset retirement obligation at the end of the 8th year. After acquisition. Mooney sold the asset for $980000 and the costs of dismanting & removing the offshore oil platform totaled $ 1,200,000. (Please give the steps for requirement c because it will be different numbers than what I provided). Thanks.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

What will you do or say to Anthony about this issue?

Answered: 1 week ago