SHOW WORK

Sandhill Company purchases an oil tanker depot on January 1, 2020, at a cost of $623,500. Sandhill 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 $80,030 to dismantle the depot and remove the tanks at the end of the depot's useful life. (a) Prepare thejournal entries to record the depot and the asset retirement obligation for the depot on January 1, 2020. Based on an effective-interest rate of 6%, the present value of the asset retirement obligation on January 1, 2020, is $44,688. (If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit January 1, 2020 Notes Payable Interest Expense (To record the depot) January 1, 2020 (To record the asset retirement obligation)