Reference no: EM133118523
Question - Greenlight Corporation operates a number of landfills in Canada from which it earns revenues by charging a fee to users, mostly municipalities in Ontario and Quebec. The company developed a landfill in London, Ontario, on January 1, 2012, at a cost of $2,400,000. Greenlight was legally required to clean up the landfill site and restore the environment to its original, pristine conditions at the end of the landfill's 20-year useful life, at an estimated cost of $500,000. Greenlight estimated that 30% of the cost of environment cleanup was caused by opening the landfill site, and that the remaining 70% of the cost would be caused by accepting trash to fill the site over time. Landfill operations in 2012 and 2013 increased the cost of site cleanup at the end of the landfill's useful life by $28,800 and $30,800, respectively. The estimated residual value of the landfill was $28,000, and Greenlight used straight-line depreciation. Greenlight followed ASPE.
Required -
(1) Prepare journal entries to record the development of the landfill, and the asset retirement obligation for the landfill, on January 1, 2012. Use 4% as the discount rate.
(2) Prepare all journal entries required for the landfill and the asset retirement obligation at December 31, 2012.
(3) Prepare all journal entries required for the landfill and the asset retirement obligation at December 31, 2013.
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