On January 1 2022, Net Zero Solar Ltd. has constructed a solar electric generating farm on...
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On January 1 2022, Net Zero Solar Ltd. has constructed a solar electric generating farm on property leased from the Provincial Government on a twenty-year lease. Terms of the lease include a requirement that the site be restored to its original condition at the end of that time. Net Zero has estimated that the cost of restoration will be $3,500,000 and that an appropriate interest rate for discounting this obligation is 3%. The company uses straight-line amortization for all capital assets. Assume Solar has a December 31 year end. Required: A) Assume that Net Zero's solar generating farm was put into operation on January 1, 2022. Provide all journal entries for 2022 related to Net Zero's site restoration obligation. (6 marks) B) At the end of the lease term, Net Zero pays $3,689,000 to restore the site. Provide all journal entry for the settlement of the asset retirement obligation. (2 marks) On January 1 2022, Net Zero Solar Ltd. has constructed a solar electric generating farm on property leased from the Provincial Government on a twenty-year lease. Terms of the lease include a requirement that the site be restored to its original condition at the end of that time. Net Zero has estimated that the cost of restoration will be $3,500,000 and that an appropriate interest rate for discounting this obligation is 3%. The company uses straight-line amortization for all capital assets. Assume Solar has a December 31 year end. Required: A) Assume that Net Zero's solar generating farm was put into operation on January 1, 2022. Provide all journal entries for 2022 related to Net Zero's site restoration obligation. (6 marks) B) At the end of the lease term, Net Zero pays $3,689,000 to restore the site. Provide all journal entry for the settlement of the asset retirement obligation. (2 marks)
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A Journal entries for 2022 related to Net Zeros site restoration obligation 1 On January 1 2022 when ... View the full answer
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
8th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
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