Refer to the information for Lu Corp. in BE13-18. Prepare any necessary adjusting entries that are associated with the asset retirement obligation and the asset retirement costs at December 31, 2014, assuming that Lu follows
(a) IFRS, and
(b) ASPE.
In BE13-18
Lu Corp. erected and placed into service an offshore oil platform on January 1, 2014, at a cost of $10 million. Lu is legally required to dismantle and remove the platform at the end of its nine-year useful life. Lu estimates that it will cost $1 million to dismantle and remove the platform at the end of its useful life and that the discount rate to use should be 8%. Prepare the entry to record the asset retirement obligation.