Oil products company purchases an oil tanker depot on

Assignment Help Accounting Basics
Reference no: EM13391289

Oil Products Company purchases an oil tanker depot on January 1, 2014, at a cost of $2,400,000. Oil Products expects to operate the depot for 10 years, at which time it is legally required to dismantle the depot and remove the underground storage tanks. It is estimated that it will cost $300,000 to dismantle the depot and remove the tanks at the end of the depot's useful life.

Instructions

(a) Prepare the journal entries to record the depot and the asset retirement obligation for the depot on January 1, 2014. Based on an effective interest rate of 6%, the present value of the asset retirement obligation on January 1, 2014, is $167,516.

(b) Prepare any journal entries required for the depot and the asset retirement obligation at December 31, 2014. Oil Products uses straight-line depreciation; the estimated residual value for the depot is zero.

(c) On December 31, 2023, Oil Products pays a demolition firm to dismantle the depot and remove the tanks at a price of $320,000. Prepare the journal entry for the settlement of the asset retirement obligation.

Reference no: EM13391289

Questions Cloud

Four characteristics of services make them different from : 1.when palm products developed its glow-in-the-dark camping drinkware line the company learned from consumer feedback
Find the bond ratings for your firm and its closest : in your project you are entering into a long-term contract to provide services - you are not lending to the
Jack holmes is a middle-aged lower-level employee at an : jack holmes is a middle-aged lower-level employee at an automobile service center. though he is not paid very well he
One of the cognitive changes older adults worry about and : one of the cognitive changes older adults worry about and fear most is memory loss. some older adults may assume that
Oil products company purchases an oil tanker depot on : oil products company purchases an oil tanker depot on january 1 2014 at a cost of 2400000. oil products expects to
Determine the limitation of reinforcement theory in : what is the limitation of reinforcement theory in explaining changes in behavior? a it does not recognize the effect of
Norman has been working in the sales division for a large : norman has been working in the sales division for a large manufacturing company for four months. in this short period
Locate an article from a financial periodical from the past : locate an article from a financial periodical from the past 2 years about a company that restated its financial
What is the economic effect that takes hold as the size of : 1.which example illustrates a law enacted to facilitate commerce affecting the place aspect of the marketing

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd