Portspa Corp. installed new underground tanks at a service station site on January 1, 2020, at a

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Question:

Portspa Corp. installed new underground tanks at a service station site on January 1, 2020, at a cost of $220,000. The tanks had an expected useful life of 10 years with no residual value. Portspa amortizes tanks using the straight-line method. At the time of acquisition, the expected future cost of removing and disposing of the tanks was $60,000. Portspa’s risk-adjusted 10-year discount rate was 5% at the time of acquiring the tanks. Portspa’s year-end is December 31 and the company prepares annual financial statements.

Provide dated journal entries to record

a) Acquisition of the tanks on January 1, 2020.

b) Adjustments for the year ended December 31, 2020

c) Removing and disposing (nil proceeds) of the tanks on January 1, 2030, incurring costs of $70,300.