You now begin with the file related to the obligations for asset retirement. On January 1, 2016, DCI, with

great fanfare and publicity, opened an inter galactic satellite tracking station equipped with the latest

electronic equipment located somewhere in the Rocky mountains of Alberta. The company had obtained

a provincially issued permit to install 3 large tracking antennae and two telescopes to provide users with

upto date telecommunication and weather data. The permit was issued to operate the equipment initially

for ten years, beginning January 1, 2016. The company was required to assume the legal and financial

obligations under the provincial removal and restoration laws, to dismantle and remove all constructed

structures and to restore the site to its original state at the end of the contract.

You had noticed the remark in the note pinned on the ARO file by Mr. Feegerz, "Oh, I didn't realize we

had to pay for closing down this circus in Alberta. Wasting good money on star gazing. Look into this

issue please." Under this plan, the company capitalized the cost in its books as Space Tracking

Equipment. They also recorded the present value of the estimated future obligation to restore the sites.

The cost would be amortized on a straight line basis over a ten-year life.

You reviewed some of the operating figures related to previous years. DCI had reported on its balance

sheet, dated December 31, 2018, $871,851 as the balance of the Asset Retirement Obligation. The

company had also recorded a depreciation expense of $1,031,169 for the Space Tracking Equipment for

the year 2018. The company's estimated its cost of capital to be 7%.

c) Determine the cost which DCI incurred to install the 3 large tracking antennae and two telescopes

which were classified as Space Tracking Equipment.

d] Now assume that it is time to dismantle the Space Tracking Equipment at the end of its 10-year life.

DCI issued 2,000 5-year 6% bonds, par value $1,000 to Environmental Engineers, Inc., a restoration

company to undertake and complete the required restoration work. Prepare the required journal entry,

in proper format, to record this transaction.