Question
Pronghorn Company purchases an oil tanker depot on January 1, 2017, at a cost of $ 657,400. Pronghorn expects to operate the depot for 10
Pronghorn Company purchases an oil tanker depot on January 1, 2017, at a cost of $ 657,400. Pronghorn expects to operate the depot for 10 years, at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that it will cost $ 73,610 to dismantle the depot and remove the tanks at the end of the depots useful life.
Prepare any journal entries required for the depot and the asset retirement obligation at December 31, 2017. Pronghornuses straight-line depreciation; the estimated salvage value for the depot is zero. (Round answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Date | Account Titles and Explanation | Debit | Credit |
December 31, 2017 | |||
(To record depreciation for the depot) | |||
December 31, 2017 | |||
(To record depreciation on asset retirement obligation) | |||
December 31, 2017 | |||
(To record interest on asset retirement obligation) |
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