BPP Company maintains underground storage tanks for its operations. A new storage tank was installed and made ready for use at a cost of $$1,600,000$ on January $1$ of the current year. The tank$$s useful life is estimated at $15$ years, at which time the company is legally required to remove the tank and restore the area at an estimated cost of $$160,000.$ The appropriate discount rate for the company is $12\%.$

Required

a$.$ On January $1,$ record the entry for $(1)$ the purchase and installation of the storage tank and $(2)$ the related asset retirement obligation.

b$.$ Record adjusting entries on December $31$ of the current year for $(1)$ depreciation and $(2)$ accretion.

c$.$ Assume that on December $31,$fteen years later, the tank is safely removed at a cost of $$184,000.$ Record the required journal entry.

Note: Round answers to the nearest whole dollar.

Account Name Dr$.$ Cr$.$

a$.1.$ Jan. $1$

To record purchase of storage tank

a$.2.$ Jan. $1$

To record asset retirement obligation

b$.1.$ Dec. $31$

To record depreciation

b$.2.$ Dec. $31$

To record accretion

c$.$ Dec. $31,$ Year $15$

To record asset retirement