Radonna acquired a power plant a cost of $6.2 million. The company estimates the plant will have a useful life of 25 years (with no salvage value), after which they will be required to dismantle the plant restore the property. The present value of these asset retirement costs is $475,000 based on the 7% aftertax discount rate (they have already done the PV calculation for you).

a. Prepare the journal entry prepared at the completion of construction to value the power plant.

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

c. Prepare the journal entries required to record the disposal of the asset and the settlement of the asset retirement obligation at the end of the 5 th year after acquisition of the power plant. Radonna sold the plant for $5.1 million and the costs of dismantling the plant and restoring the property were $850,000