view Policies Current Attempt in Progress On January 1, 2020, Martinez Corporation erected a drilling platform at a cost of $ 5,187,000. Martinez is legally required to dismantle and remove the platform at the end of its 6 year useful life, at an estimated cost of $ 902,500. Martinez estimates that 70% of the cost of dismantling and removing the platform is caused by acquiring the asset itself, and that the remaining 30% of the cost is caused by using the platform in production. The present value of the increase in asset retirement obligation related to the production of oil in 2020 and 2021 was $ 30,712 and $ 33,168, respectively. The estimated residual value of the drilling platform is zero, and Martinez uses straight-line depreciation. Martinez prepares financial statements in accordance with IFRS. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.Prepare the journal entries to record the acquisition of the drilling platform, and the asset retirement obligation for the platform, on January 1, 2020, assuming that Martinez prepares financial statements in accordance with ASPE. An appropriate interest or discount rate is 8%. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1, 2020 (To record the cost of drilling platform) Jan. 1, 2020 (To recognize the retirement liability) e Textbook and Media Assistance Used List of AccountsPrepare any journal entries required for the platform and the asset retirement obligation at December 31, 2020, assuming that Martinez prepares financial statements in accordance with ASPE. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 v (To record depreciation expense) Dec. 31, 2020 (To record accretion expense) Dec. 31, 2020Prepare any journal entries required for the platform and the asset retirement obligation at December 31, 2021, assuming that Martinez prepares financial statements in accordance with ASPE. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2021 (To record depreciation expense) Dec. 31, 2021 (To record accretion expense) Dec. 31, 2021 v (To adjust asset retirement obligation)Assume that on December 31, 2025, Martinez dismantles and removes the platform for a cost of $ 875,900. Prepare the journal entry to record the settlement of the asset retirement obligation, assuming that Martinez prepares financial statements in accordance with ASPE. Also assume its carrying amount at that time is $ 902,500. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2025 V V eTextbook and Media List of AccountsPrepare the journal entries to record the acquisition of the drilling platform, and the asset retirement obligation for the platform, on January 1, 2020, assuming that Martinez prepares financial statements in accordance with ASPE. An appropriate interest or discount rate is 8%. (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1, 2020 Drilling Platform Depreciation Expense Interest Payable No Entry Gain on Settlement of Asset Retirement Obligation Jan. 1, 2020 Interest Expense Accumulated Depreciation - Drilling Platform Asset Retirement Obligation Accounts Receivable Cash Accounts Payable Accretion Expense Inventory Loss on Settlement of Asset Retirement Obligation e Textbook and Media Assistance Used List of Accounts
