Question: On January 1 2016 Marshall Inc purchased equipment for
On January 1, 2016, Marshall Inc. purchased equipment for $ 1,000,000 that was to be used in various toxic chemical processes. The asset has a useful life of 20 years. Additionally, Marshall estimates that it will cost $ 100,000 to remove the asset and restore the site to a suitable use. Based on Marshall’s 10% discount rate, the present value of these future restoration costs at the time the equipment is purchased is $ 14,864. Prepare the entry to record the acquisition of the asset.
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