Lifeline Biofuels built an oil rie at a cost of S4.5 million. The company estimates the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Lifeline Biofuels built an oil rie at a cost of S4.5 million. The company estimates the oil rig will have a useful life of 20 years (with no salvage value), after which Federal regulations require that the oil rig must be dismantled and the land area restored at an expected fair value of $1.3 million. The present value of these asset retirement costs is $400,000 based on the 6% after-tax discount rate. The company follows U.S. GAAP. Required: 1. Prepare the journal entry prepared at the completion of construction to value the oil rig. 2. Prepare the journal entry to record the annual increase in the carrying value of the liability. 3. At the end of 20 years, the company dismantles the oil rig and restores the land area at a cost of $1.5 million. Prepare the journal entry to record payment of the settlement costs in cash. Cush com men sro 1. 2. 3. Lifeline Biofuels built an oil rie at a cost of S4.5 million. The company estimates the oil rig will have a useful life of 20 years (with no salvage value), after which Federal regulations require that the oil rig must be dismantled and the land area restored at an expected fair value of $1.3 million. The present value of these asset retirement costs is $400,000 based on the 6% after-tax discount rate. The company follows U.S. GAAP. Required: 1. Prepare the journal entry prepared at the completion of construction to value the oil rig. 2. Prepare the journal entry to record the annual increase in the carrying value of the liability. 3. At the end of 20 years, the company dismantles the oil rig and restores the land area at a cost of $1.5 million. Prepare the journal entry to record payment of the settlement costs in cash. Cush com men sro 1. 2. 3.
Expert Answer:
Answer rating: 100% (QA)
1 Journal entry at the completion of construction of oil rig Particulars Debit Credit Oil Rig 49 mil... View the full answer
Related Book For
Accounting
ISBN: 978-0324662962
23rd Edition
Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren
Posted Date:
Students also viewed these accounting questions
-
A backhoe acquired on January 5 at a cost of $84,000 has an estimated useful life of 12 years. Assuming that it will have no residual value, determine the depreciation for each of the first two years...
-
An item of equipment acquired on January 1 at a cost of $50,000 has an estimated life of five years and an estimated salvage of $10,000. Required a. From a management perspective, from among the...
-
On October 1, 2018, Chines Company purchased equipment at a cost of $ 70 comma 000, signing a nine-month, 4% note payable for that amount. Record the October 1 purchase. Also record the adjusting...
-
The Come-On-In company produces two types of entrance doors: Standard and Deluxe.The allocation base for indirect manufacturing costs has been direct labor hours.For 2016, the company completed the...
-
Taft and Luxor decided to incorporate a joint venture on January 1, 2013. On that date, Taft contributed a piece of equipment that had a carrying value of $350,000 and a fair value of $700,000 for a...
-
Find these values of the Euler -function. a) (4). b) (10). c) (13).
-
Give examples of information systems and automated information systems. How do they differ from each other?
-
Listed here are the total costs associated with the 2011 production of 10,000 Blu-ray Discs (BDs) manufactured by Hip-Hop. The BDs sell for $15 each. Required 1. Classify each cost and its amount as...
-
The following Turing Machine is supposedly a solution for BB(6): q4 1:1, R 1, R 1:1.L 1:1, L 10L q1 D1, R 0:1, L 92 93 1:0,L 95 R 90 Halt) a) What is a Busy Beaver? b) Do you believe that this is a...
-
The table shown below presents data regarding womens singles Grand Slam tournaments tennis champions. Since 1968 (the start of the Open era), 45 different women have won one or more major tennis...
-
A firm has earnings before interest and taxes of $27,130,net income of $16,220, and taxes of $5,450 for the year. While the firm paid out $31,600 to pay off existing debt it then later borrowed...
-
An investment has a 30% chance of producing a 15% return, a 40% chance of producing a 20% return, and a 30% chance of producing a -10% return. Part (A): What is its expected return? Part (B): What is...
-
Macroeconomic policies are the set of government rules and regulations to control or stimulate the aggregate indicators of an economy, such as national income, money supply, inflation, unemployment...
-
In 1995, a given Japanese imported automobile sold for 1,650,000 yen, or $8,400. If the car still sold for the same amount of yen today but the current exchange rate is 115 yen per dollar, what would...
-
Write a Python program that takes two numbers as input from the user and prints their sum.
-
what decision refers to the selection of the best means to achieve a goal and not to the selection of the goal itself. If an individual wishes to own a car primarily as a means of transportation,...
-
A friend hurts your feelings. You say nothing, assuming you'll get over it. What typ communication style does this response exhibit? Emotionally spontaneous Emotionally self-aware El Champion Emotion...
-
The vapor pressure of the liquid NH, is measured at different temperatures. The following vapor pressure data are obtained. Temperature, K P, mmHg 217.1 223.4 234.7 588.1 Calculate the enthalpy of...
-
Jupiter Insurance Co. is a regional insurance company that began operations on January 1, 2010. The following transactions relate to trading securities acquired by Jupiter Insurance Co., which has a...
-
How would each of the following costs be classified if units produced is the activity base? a. Direct materials costs b. Direct labor costs c. Electricity costs of $0.35 per kilowatt-hour
-
For (a) through (d), identify the items designated by X and Y. a. Purchases (X + Y) = Net purchases. b. Net purchases + X = Cost of merchandise purchased. c. Merchandise inventory (beginning) + Cost...
-
In the FRED database, find a variable that is available in both a seasonally adjusted form and a not seasonally adjusted form. Plot both over time and describe how large the seasonal variation in the...
-
How does each of the following variables behave over the business cycle? Develop graphs to show your results and give economic explanations. a. Real imports b. Federal government receipts c. Housing...
-
An economic variable is persistent if declines in the variable tend to be followed by more declines, and increases by more increases. This question asks you to study the persistence of the civilian...
Study smarter with the SolutionInn App