Russel Industries has just completed construction of an oil drilling facility at a cost of $$10$

million. The facility has a useful life of $10$ years, is expected to have a $$1$ million residual

value, and is depreciated on the straight$-$line basis. The facility is completed at the end of

December $2022.$ Under environmental regulations, Russel Industries is required to

dismantle and remove the facility at the end of its useful life and bear any cleanup costs,

which are inevitable in such operations. The cost to comply with the law is estimated to be

$$650,000.$ The appropriate discount rate is $7\%.$ Assume that dismantling and cleanup can

be accomplished within the first month after closing the facility.

Required

Record the capitalization of dismantling and cleanup costs.

Prepare a partial Balance Sheet and Income Statement for fiscal year ended

December ${31}^{st},2023.$

Prepare the entry at the end of $10$ years to extinguish the liability, assuming that there

is no change in estimates and that the entire liability is paid in cash at the end of $10$

years.