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 asset did not have a reasonably determinable quoted market price and market comparables are not available. As a result, Mooney decided to use aprobability-based estimate of the cost of dismantling and removing the platform to estimate the fair value of the retirement obligation. The probability-based estimate employs the expected cash flows needed to comply with the offshore drilling agreement based on costs of dismantling and removal in today's market. 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 (Give the steps by steps for requirement c).