A company buys a Platform for $800,000 on January 1, 2019. The life of the rig is 10 years and the expected cost to dismantle the platform at the end of 10 years is $200,000 (present value at 10% is $77,110). 10% is an appropriate interest rate for this company. What journal entry related to environmental liability should be recorded on January 1, 2019, as a result of these events? A. Debit Environmental Expense for $200,000 and credit Environmental Liability for $200,000 B. Debit Environmental Loss for $200,000 and credit Environmental Liability for $200,000. OC. Debit Platform for $200,000 and credit Environmental Liability for $200,000. O D. Debit Platform for $77,110 and credit Environmental Liability for $77.110.

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Depreciation Methods

The word "depreciation" is defined as an accounting method wherein the cost of tangible assets is spread over its useful life and it usually denotes how much of the assets value has been used up. The depreciation is usually considered as an operating expense. The main reason behind depreciation includes wear and tear of the assets, obsolescence etc.

Depreciation Accounting

In terms of accounting, with the passage of time the value of a fixed asset (like machinery, plants, furniture etc.) goes down over a specific period of time is known as depreciation. Now, the question comes in your mind, why the value of the fixed asset reduces over time.